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A query was raised regarding whether civil liability compensation following a judicial settlement for personal injury is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that if the amount is judicially recognised and pertains to physical, psychological, or moral damages, it is not taxable.
This ruling clarifies the tax-exempt status of compensation for personal injury, providing legal certainty that such payments do not constitute taxable income provided they are judicially sanctioned.
The tax team reviews your specific situation.
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