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V0324-26 13 February 2026 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · daños personales

Only moral damages are exempt from IRPF; lost profits are treated as income from work

The DGT confirms that only moral damages are exempt from IRPF, while lost profits are classified as income from work.

The question raised

Question raised: Taxation under Personal Income Tax.

The DGT's ruling

The exemption under Article 7.d) of Law 35/2006 only applies to compensation for civil liability for personal damages (physical, psychological, or moral) established by judicial ruling. Loss of earnings, being economic loss due to unreceived wages, does not constitute personal damage and must be taxed as income from employment. This income is attributed to the period in which the judgment becomes final and may be subject to the 30% reduction for having a generation period exceeding two years.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

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