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The taxpayer inquires about the taxation of compensation for a traffic accident and its associated interest. The DGT responds that compensation for personal injury is exempt if it conforms to the amount legally or judicially recognized, but interest for delay in payment is taxed as a capital gain.
Question posed: Taxation of the compensation that may be received and the interest.
Compensation for personal injury is exempt in the amount legally or judicially recognized (including settlement or transaction formulas with judicial intervention). Late payment interest is not exempt and is taxed as capital gains included in the savings tax base. The change in wealth regarding these interests occurs when they are quantified and their payment is agreed upon.
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