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New guides on the latest Spanish tax and immigration developments.
Practical tools for informed decision-making.
An insurance agent inquired whether income tax (IRPF) withholding should be applied when paying a €1,500 compensation to a client due to a contractual error. The Directorate General for Taxes (DGT) ruled that such compensation does not constitute income subject to withholding.
This ruling clarifies that compensation payments made to settle civil liability claims do not trigger income tax withholding obligations for the payer.
The tax team reviews your specific situation.
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