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V1946-21 21 June 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias y pérdidas patrimoniales

The payment of legal costs following a judicial ruling constitutes a capital loss for Personal Income Tax purposes

A query is made as to whether the payment of legal costs following a judicial ruling has an impact on Personal Income Tax. The DGT responds that this payment is a capital loss that must be included in the general tax base.

The question raised

Question raised: Impact on Personal Income Tax of the order to pay legal costs.

The DGT's ruling

The order to pay the legal costs of the prevailing party is classified as a capital loss, as it is not a consumption expense. This loss must be attributed to the tax period in which the condemnatory judgment becomes final. Its inclusion in the tax assessment shall be made in the general tax base, following the rules for the offsetting of income and capital gains.

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