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A taxpayer inquired whether compensation received for absolute and permanent disability following an accident was exempt from tax. The Directorate General for Taxes (DGT) ruled that, as the policy also covers illness, it is not classified as an accident insurance policy and is therefore subject to taxation.
This ruling clarifies that insurance payouts are only exempt if the policy is strictly limited to accident coverage; policies with broader illness coverage will trigger tax liabilities on the compensation received.
The tax team reviews your specific situation.
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