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V1451-23 26 May 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retención a cuenta

Civil liability compensation for insurance agents is not subject to income tax withholding

An insurance agent inquired whether income tax (IRPF) withholding should be applied when paying a €1,500 compensation to a client due to a contractual error. The Directorate General for Taxes (DGT) ruled that such compensation does not constitute income subject to withholding.

The question raised

Subjectivity to withholding tax under Personal Income Tax (IRPF) regarding the compensation.

The DGT's ruling

Compensation derived from the civil liability of an insurance agent in the exercise of their economic activity is not subject to withholding tax under Personal Income Tax (IRPF). This is due to the fact that it is not included in the list of income subject to withholding set forth in Article 75 of the Tax Regulation.

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