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V1856-25 14 October 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · actividad económica

Return of funds for litigation expenses not considered economic income

A lawyer asks whether the repayment of a deposit made by a client to cover litigation costs has tax implications. The DGT replies that if the funds are for expenses, they are not considered income from economic activity.

The question raised

Effects on the taxpayer's Personal Income Tax (IRPF) regarding the aforementioned restitution.

The DGT's ruling

Funds for disbursements are expenses that correspond to the client and which the professional satisfies upon prior provision of funds. If the deposit is intended to make payments for expenses on behalf of the client, such amounts do not have the nature of income from economic activity. Therefore, neither their entry into the account nor their subsequent restitution to the client affect the determination of net income.

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