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V0040-18 16 January 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Personal injury compensation is not exempt if the amount has not been judicially determined

An individual received €25,000 in compensation for an injury caused by a third party through an out-of-court settlement. The DGT has ruled that the Personal Income Tax (IRPF) exemption does not apply because the amount was neither determined by a court nor by law.

The question raised

Consideration of the compensation as exempt income in Personal Income Tax (IRPF).

The DGT's ruling

For compensation for civil liability for personal injury to be exempt, its amount must be legally or judicially recognized. The judicially recognized amount includes resolutions by judges or intermediate formulas with judicial intervention, such as a judicial settlement. As it is an extrajudicial agreement without judicial intervention, this requirement is not met.

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