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V3070-18 28 November 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Compensation for pecuniary damages arising from contractual civil liability is taxed as capital gains

A query is made as to whether compensation received for professional negligence by a lawyer is exempt from Personal Income Tax (IRPF). The DGT responds that, as it concerns pecuniary rather than personal damages, the amount must be taxed.

The question raised

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

The DGT's ruling

The compensation is not exempt under Article 7.d) of Law 35/2006 as it does not correspond to personal damages, but rather to economic loss. As it derives from contractual civil liability, it is classified as a capital gain that forms part of the general tax base. Its quantification shall be the amount determined by out-of-court settlement or court judgment.

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