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V1162-25 1 July 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · condena en costas

Judicial costs won are tax-exempt if defence expenses are deducted

The DGT confirms that the winner of a legal proceeding with a cost order may deduct the expenses incurred, without exceeding the amount received.

The question raised

"Which judicial expenses are deductible for a person who has won a legal proceeding and legal costs?"

The DGT's ruling

The award of legal costs constitutes compensatory damages of a restorative nature for the prevailing party. To determine the capital gain, the litigant may deduct from the amount received the expenses incurred due to the litigation, up to a maximum limit equal to the amount received. If the award of legal costs corresponds to the expenses incurred, no capital gain shall arise.

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