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A query is made as to whether compensation for personal injury recognized by judicial sentence must be subject to Personal Income Tax (IRPF) withholding. The DGT responds that, as it is exempt income, there is no obligation to apply withholding.
Issue raised: Subjecting the aforementioned compensation to withholding.
Compensation for civil liability for personal injury, in the amount legally or judicially recognized, is exempt pursuant to Article 7.d) of the LIRPF. As it constitutes exempt income, there is no obligation to apply withholding or payment on account in accordance with Article 75.3 of the implementing regulations of the tax.
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