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V1928-14 16 July 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · intereses indemnizatorios

Legal interest from a judgment on wage claims is taxed as capital gains

A query was raised regarding the tax classification of legal interest arising from a court judgment for unpaid wages. The DGT has determined that, as these interests are compensatory in nature, they must be taxed as capital gains rather than income from movable capital.

The DGT's ruling

Legal interest intended to compensate for damages due to breach or delay constitutes compensatory interest and is taxed as capital gains. Its quantification shall be the amount of interest received, without the possibility of deducting procedural expenses to determine said change in wealth. If the interest compensates for a period not exceeding one year, it is integrated into the general tax base; if it compensates for a period exceeding one year, it is integrated into the savings tax base.

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