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V3078-23 24 November 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Civil liability compensation is not exempt if the amount is not legally or judicially recognised

A taxpayer inquired whether compensation received following their mother's death due to negligence in a care home is exempt from Personal Income Tax (IRPF). The Directorate General of Taxes (DGT) ruled that, as the amount has not been legally or judicially recognised, the compensation must be taxed as a capital gain.

The question raised

Taxation of the compensation received.

The DGT's ruling

For compensation for civil liability to be exempt income, it must correspond to personal damages and its amount must be legally or judicially recognized. The judicially recognized amount includes resolutions by judges or intermediate formulas involving judicial intervention, such as a judicial settlement. If this requirement is not met, the compensation is classified as a capital gain.

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