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V1335-19 ·10 June 2019 ·consulta-vinculante Medium impact
Tax

Compensation for professional negligence by a lawyer is taxed as a capital gain

A taxpayer inquired whether compensation received from their lawyer's insurer, due to the failure to recover redundancy pay, is tax-exempt. The Directorate General for Taxes (DGT) ruled that it is not exempt, as it constitutes compensation for financial loss rather than personal injury or redundancy pay itself.

In 6 key points

How it affects those involved

This ruling clarifies that compensation for financial damages resulting from professional negligence is subject to taxation as a capital gain, rather than being exempt under the rules governing personal injury or redundancy payments.

Lifecycle

2019-06-10PublishedPublished 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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