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An individual received compensation from accident insurance after suffering a permanent disability due to an accident in public transport. The DGT determines that said compensation is exempt income for Personal Income Tax purposes, but subject to limits.
Question posed: Taxation of the compensation in Personal Income Tax.
Compensation for personal injury derived from accident insurance contracts is exempt from Personal Income Tax, provided that the premiums have not been deductible nor have they reduced the taxable base. The exemption is quantitatively limited to the amount resulting from applying the damage assessment system of the Law on Civil Liability and Insurance in the Circulation of Motor Vehicles.
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