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A lawyer has requested clarification on whether VAT and Personal Income Tax (IRPF) apply when fees are only payable if the case is won. The Directorate General for Tax Affairs (DGT) ruled that there is no VAT liability as it does not constitute self-consumption, and the rule for valuing free services does not apply for Income Tax purposes.
This ruling clarifies the tax implications for lawyers working on a contingency basis, confirming that unsuccessful cases do not trigger VAT or Income Tax liabilities related to the provision of free services.
The tax team reviews your specific situation.
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