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V1518-19 24 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Expropriation compensation classified as capital gain and attributed to the year of occupation

A query was raised regarding the classification and timing of tax reporting for compensation received from the compulsory expropriation of rural land. The Directorate General for Taxes (DGT) has determined that such compensation constitutes a capital gain and must be attributed to the tax period in which the occupation occurs.

The question raised

Classification and temporal imputation.

The DGT's ruling

Compensation for expropriation, except for temporary occupation, constitutes a capital gain or loss. In cases of expropriation due to urgency, the change in assets is understood to have occurred when the prior deposit is made and the occupation proceeds. However, if more than one year has elapsed between the delivery of the asset and the collection of the fair price, the imputation for installment transactions may be applied. Compensation for temporary occupation is classified as income from real estate capital, being imputed to the period in which it becomes due, i.e., when the property is occupied.

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