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V3372-15 2 November 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos de actividades económicas

Professional fees collected following a court ruling are taxed as income from economic activities

An architect seeks guidance on how to declare income received after winning a lawsuit for unpaid services. The DGT rules that these constitute income from economic activities and that late payment interest is treated differently depending on its nature.

The question raised

How the amounts to be received must be declared in the Personal Income Tax (IRPF).

The DGT's ruling

Amounts for unpaid professional services are income from economic activities and must be attributed to the period of accrual, coinciding with the finality of the judicial ruling. The reduction for irregular income is not applicable as they are regular income from the activity. Compensatory late payment interest is taxed as capital gains in the savings base, unless they indemnify a period not exceeding one year, in which case they are included in the general base. Legal fees are deductible if they are linked to the activity and meet the requirements for attribution and justification.

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