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V1976-24 17 September 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Compensation for professional negligence by a lawyer is taxed as a capital gain

A taxpayer inquired whether compensation received due to their lawyer's negligence (to cover legal costs) is exempt from Personal Income Tax (IRPF). The Directorate General of Taxes (DGT) ruled that it does not qualify as an exemption for personal injury, but rather as a capital gain.

The question raised

Taxation of the compensation in the Personal Income Tax (IRPF).

The DGT's ruling

The compensation is not exempt under Article 7.d) of Law 35/2006 because it does not repair personal damages (physical, psychological, or moral), but rather material damages due to economic loss. As it is not a transfer, it is classified as a capital gain under Article 33.1, quantified by the amount of the compensation pursuant to Article 34.1.b). It must be included in the general taxable base.

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