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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

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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