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V0015-22 4 January 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización por responsabilidad civil

Compensation for professional negligence by an advisor is taxed as capital gains in Personal Income Tax

A taxpayer received compensation after suing their advisory firm for errors in their Personal Income Tax return. The DGT has determined that this amount is not exempt, as it constitutes property damage rather than personal injury, and must therefore be taxed as a capital gain.

The question raised

Taxation under Personal Income Tax.

The DGT's ruling

Compensation for professional civil liability is not exempt under Article 7.d) of the Personal Income Tax Law, as it compensates for economic loss and not personal injury. Article 37.1.g) also does not apply because it does not derive from an accident involving an asset. Therefore, it must be classified as a capital gain due to the incorporation of money into the assets, calculated based on the full amount of the compensation.

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