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A company has requested guidance on how to account for and whether a provision for court-ordered compensation pending a final judgment is tax-deductible. The DGT has ruled that income is recognised when the amount is received and can be freely disposed of, and that provisions for litigation are tax-deductible.
This ruling clarifies the timing for tax recognition of legal compensation and confirms the tax deductibility of litigation provisions.
The tax team reviews your specific situation.
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