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V3545-20 11 December 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias y pérdidas patrimoniales

Inheritance Tax is not a capital loss, but may increase the acquisition value

A query was raised regarding whether Inheritance and Gift Tax payments can be treated as capital losses for Personal Income Tax (IRPF) purposes, and how compensation for professional negligence is taxed. The DGT ruled that the tax does not constitute a capital loss, but it does increase the acquisition value of assets. Furthermore, compensation for financial damages is considered a capital gain subject to taxation.

The question raised

Possibility of computing a capital loss in the Personal Income Tax (IRPF) for the amount paid for Inheritance and Gift Tax.

The DGT's ruling

The payment of the Inheritance and Gift Tax quota does not constitute a capital loss. However, if the donation consists of assets or rights, said quota is incorporated into their acquisition value to determine the gain or loss in a future transfer. On the other hand, compensation for civil liability that compensates for property damage (and not personal damage) is not exempt and must be taxed as a capital gain integrated into the general taxable base.

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