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V0491-25 27 March 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas exentas

Moral damages compensation is tax-exempt, material damages are taxable

A flight commander asks whether judicial compensation for moral harm and salary differences is exempt from income tax. The DGT states that only the moral damage portion is exempt, while the economic loss portion is taxable as income from work.

The question raised

Question posed: Taxation under Personal Income Tax (IRPF).

The DGT's ruling

Compensation for civil liability for personal damages (physical, psychological, or moral) with a judicially recognized amount is exempt income pursuant to Article 7.d) of Law 35/2006. However, amounts for material damages or economic losses derived from salary differences are taxed as income from employment. Regarding the 30% reduction, it does not apply if it was applied to other income with a generation period exceeding two years in the previous five periods.

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

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