Skip to content
Back to index
V0115-14 20 January 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · ejecución provisional

Compensation received via provisional enforcement is not taxable until the judgment becomes final

A company enquired whether compensation received through the provisional enforcement of a judgment should be declared as income. The DGT ruled that income is only accrued once the judgment becomes final.

The question raised

Whether the recorded provision is tax-deductible for Corporate Income Tax purposes. If not, whether the consulting entity is obliged to declare this extraordinary income in 2013, or upon the final resolution of the appeal.

The DGT's ruling

Compensation awarded by judicial sentence is accrued and included in the tax base when the sentence becomes final, at which point legal certainty exists. Collection through provisional enforcement has no impact on the tax base for the fiscal year, and must be recorded as a liability. If the final sentence is unfavorable, the refund of the amount shall have no impact on the tax base.

Book your free first meeting