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An individual suffering from total permanent disability due to a work accident has enquired whether compensation from their collective insurance is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) has ruled that it is not exempt, as the insurance policy is not exclusively for accidents and must be taxed as employment income.
This ruling clarifies that compensation from collective insurance schemes involving pension commitments is subject to taxation as employment income, rather than being exempt, provided the policy covers more than just accident insurance.
The tax team reviews your specific situation.
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