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V1710-21 2 June 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Personal injury compensation from road accidents is exempt from Income Tax if it meets legal amounts

A query was raised regarding whether compensation received through an out-of-court settlement for a road accident, calculated according to the scales in Law 35/2015, is exempt from Personal Income Tax (IRPF). The Directorate-General for Traffic (DGT) confirms that the exemption applies if the amount corresponds to what is legally recognised under civil liability regulations.

The question raised

It is asked whether the compensation received is exempt from Personal Income Tax.

The DGT's ruling

Compensation for civil liability for personal injury is exempt in the amount legally or judicially recognized. In traffic accidents, the legal amount is that established according to the consolidated text of the Law on civil liability and insurance in the circulation of motor vehicles. Therefore, the compensation is exempt provided that it is limited to personal injury and its amount corresponds to that established in said regulations.

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