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A worker received compensation from an insurer after suffering total permanent disability due to a work accident. The DGT determines that this amount is exempt from Personal Income Tax, but limited by the system for the assessment of damages.
Question raised: Taxation of the compensation in Personal Income Tax.
Compensation received under an accident insurance contract is exempt from Personal Income Tax pursuant to Article 7.d) of Law 35/2006. However, said exemption is limited to the amount resulting from the application of the system for the assessment of damages caused to persons in traffic accidents. For accidents occurring from 2016 onwards, the system established in Law 35/2015 must be applied.
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