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V2847-20 22 September 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Personal injury compensation exempt from Income Tax only if amount is legally or judicially determined

A taxpayer inquired whether compensation received for a fall in a commercial premises is exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the exemption does not apply because the amount has not been determined by a court ruling or by law.

The question raised

Taxation in the Personal Income Tax (IRPF) of the compensation received: application of the exemption set forth in Article 7.d) of Law 35/2006.

The DGT's ruling

For compensation for civil liability for personal injury to be exempt, its amount must be legally or judicially recognized. The judicially recognized amount includes resolutions by judges or intermediate formulas involving judicial intervention, such as conciliation or judicial settlement. In this case, as it is neither a traffic accident nor is there a judicially determined amount, the exemption does not apply.

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