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V1120-14 21 April 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Tax refund price supplements and legal defence costs are taxed as capital gains and losses

Consultants enquired whether a supplement received from a VAT refund and legal defence costs incurred following the sale of shares should be taxed. The DGT ruled that both concepts constitute changes in net wealth that must be reported in the periods in which the alterations occur.

The question raised

Inquiry is made regarding the taxation of the positive wealth variation obtained by the applicants due to the difference between the supplement received and the amount of legal defense expenses incurred in the various appeals and claims in which the sold entity was involved.

The DGT's ruling

The price supplement derived from the fulfillment of agreed conditions constitutes a capital gain that must be imputed to the period in which the refund is issued by the Administration. On the other hand, legal defense expenses incurred by the sellers are imputed as capital losses in the periods in which such fees were accrued. As these are shares not related to economic activities, these variations are considered savings income.

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