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V0614-20 31 March 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · responsabilidad civil

Compensation for financial loss due to professional negligence is taxed as a capital gain

A client received compensation following a settlement with lawyers for financial losses resulting from the mismanagement of a stock option. The Directorate General for Taxes (DGT) has ruled that this amount is not exempt and must be taxed as a capital gain.

The question raised

Taxation of the compensation received, and specifically whether it should be included in the savings tax base.

The DGT's ruling

The compensation is not exempt under Article 7 d) of the Personal Income Tax Law (LIRPF) as it concerns property damage rather than personal injury. As it derives from contractual civil liability, it is classified as a capital gain that forms part of the general tax base. Its quantification corresponds to the amount determined in the out-of-court settlement.

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