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V2244-23 27 July 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas exentas

Civil liability compensation is exempt from Personal Income Tax if it compensates for personal damages

A person inquires whether the 50,000 euro compensation received via a court ruling for violation of fundamental rights is exempt from Personal Income Tax. The DGT responds that the exemption depends on whether the amount compensates for personal damages and not material damages.

The question raised

Question posed: Taxation of the compensation in Personal Income Tax.

The DGT's ruling

For civil liability compensation to be exempt under Article 7.d) of Law 35/2006, it must concern personal damages (physical, psychological, or moral) and its amount must be legally or judicially recognized. The exemption does not apply if the compensation corresponds to material damages or economic losses.

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