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V2603-23 27 September 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Compensation for non-pecuniary damages arising from civil liability is exempt from Personal Income Tax (IRPF)

A query was raised regarding whether judicial compensation for non-pecuniary damages resulting from a breach of occupational risk prevention regulations is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that, as the compensation pertains to personal (non-pecuniary) damages and the amount has been judicially determined, the income is exempt.

The question raised

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

The DGT's ruling

Compensations for civil liability for personal injury, including physical, psychological, or moral damages, are exempt from Personal Income Tax (IRPF) pursuant to Article 7.d) of Law 35/2006. For the exemption to apply, the amount must be legally or judicially recognized, including cases involving judicial intervention. As it is compensation for moral damages and not for material damages, it meets the requirements for exemption.

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