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V1457-20 ·19 May 2020 ·consulta-vinculante Medium impact
Tax

Payment as a joint and several debtor constitutes a capital loss only when the right of reimbursement is exhausted

The taxpayer asks whether paying a debt under joint and several liability can be treated as a capital loss for Personal Income Tax (IRPF) purposes. The Directorate General for Taxes (DGT) rules that payment does not automatically trigger a loss, as a right of credit remains against the principal debtor.

In 6 key points

How it affects those involved

This ruling clarifies that taxpayers cannot immediately claim a tax loss upon paying someone else's debt; they must first demonstrate that their right to recover that money from the original debtor has been exhausted.

Lifecycle

2020-05-19PublishedPublished 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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