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V1326-21 ·11 May 2021 ·consulta-vinculante Medium impact
Tax

Payment of legal costs is compensation: not subject to VAT or subject to Income Tax withholding

A query was raised regarding whether the payment of legal costs by the losing party is subject to VAT and whether Income Tax (IRPF) must be withheld. The DGT ruled that the payment constitutes compensation to the winning party rather than consideration for services; therefore, neither VAT nor withholding applies.

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2021-05-11PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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