Skip to content
Back to index
V2253-24 22 October 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · condena en costas

Payment of legal costs does not trigger VAT or require an invoice for the payer

A query was raised regarding the validity of a pro forma invoice for legal costs for the purpose of deducting VAT and Income Tax. The DGT ruled that the payment of legal costs constitutes compensation and is not a transaction subject to VAT for the party making the payment.

The question raised

Validity of a pro forma invoice, corresponding to the fees of the lawyer and court representative of the winning party, for the purposes of VAT deduction and deductibility in Personal Income Tax (IRPF).

The DGT's ruling

Lawyers and court representatives must invoice their services to the winning party, who is the recipient of the service. The payment of legal costs by the losing party is an indemnity that does not constitute a transaction subject to VAT. Therefore, there is no tax impact nor an obligation to issue an invoice to the party liable for payment. For Personal Income Tax (IRPF) purposes, the court order constitutes an expense or capital loss that may be substantiated by the means of proof admitted under Law.

Book your free first meeting