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V1359-14 21 May 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Compensation for property damage and late payment interest are taxed as capital gains

A taxpayer has enquired about the tax treatment of compensation and interest received following a fire on their estate. The DGT clarifies that no exemption applies for property damage and distinguishes the tax treatment based on the specific concept being indemnified.

The question raised

Treatment of the compensation and interest received in the Personal Income Tax.

The DGT's ruling

Compensations for damages to assets are considered capital gains or losses, calculating the difference between the amount received and the acquisition value proportional to the damage. Lost income is taxed as income from economic activity. Late payment interest, having an indemnification nature, is taxed as capital gains and integrated into the savings tax base, unless it compensates for a period not exceeding one year, in which case it is integrated into the general tax base.

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