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V1224-17 18 May 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · condena en costas

Legal costs awarded constitute a capital gain included in the general tax base

The taxpayer asks how amounts received as legal costs following a judicial process are taxed. The DGT rules that this amount is a capital gain due to its restorative nature regarding the expenses incurred.

The question raised

Impact of the amount corresponding to the award of legal costs on the personal taxation of the taxpayer.

The DGT's ruling

The award of legal costs generates a credit in favor of the prevailing party which constitutes a capital gain pursuant to Article 33.1 of Law 35/2006. As it does not derive from a transfer of assets, this gain must be included in the general taxable base in accordance with Articles 45 and 48 of the same law. This criterion remains applicable even if it is agreed that part of the amount shall be paid directly to the lawyer.

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