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A query was raised regarding whether compensation for legal costs should include the VAT charged by a lawyer. The DGT ruled that, as it constitutes a reimbursement of expenses, the amount for legal costs must include the VAT amounts for professional services provided to the winning party.
This ruling clarifies that when one party is ordered to pay the legal costs of another, the total amount must account for the VAT incurred on the professional services rendered to the successful party.
The tax team reviews your specific situation.
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