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V0163-18 29 January 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · costas procesales

Legal costs and interest awarded by court judgment are taxed as capital gains for Income Tax purposes

A taxpayer has enquired about the taxation of interest and legal costs following a successful lawsuit. The DGT has ruled that both legal costs and compensatory interest are classified as capital gains.

The question raised

Taxation in the Personal Income Tax (IRPF) of interest and legal costs.

The DGT's ruling

Legal costs are restorative in nature and constitute a capital gain that is included in the general tax base. Interest awarded by the judgment, being compensatory in nature for delay or non-compliance, also constitutes a capital gain. This interest gain is included in the savings tax base pursuant to Article 49.1.b) of the Personal Income Tax Law.

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