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V3537-20 10 December 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · indemnización

Compensation for non-pecuniary damages received from a Public Administration is exempt from Personal Income Tax (IRPF)

A query was raised regarding whether a €12,000 compensation for non-pecuniary damages, settled through a termination agreement in a state liability procedure with a local council, is subject to Personal Income Tax (IRPF). The Directorate-General for Taxes (DGT) ruled that such an amount is exempt.

The question raised

Taxation of compensation in Personal Income Tax (IRPF).

The DGT's ruling

Compensations paid by Public Administrations for personal injury resulting from the operation of public services are exempt from Personal Income Tax (IRPF). The concept of personal injury includes physical, psychological, and moral damages. The repeal of Royal Decree 429/1993 by Law 39/2015 does not alter the scope of this exemption in liability proceedings.

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