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V0183-21 4 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias y pérdidas patrimoniales

Legal and solicitor fees cannot be deducted from compensation received

A taxpayer inquired whether they could deduct legal and solicitor fees from compensation received following an out-of-court settlement with a bank. The Directorate General of Taxes (DGT) ruled that the compensation constitutes a capital gain, whereas the fees do not qualify as a deductible capital loss.

The question raised

Question posed: Deduction of the legal and solicitor fees incurred.

The DGT's ruling

The amount received as compensation is classified as a capital gain, which is quantified by its own value. Legal and solicitor fees cannot reduce said amount because they are considered consumption income and not a capital loss. Therefore, they have no impact on the tax assessment.

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