Workers may deduct up to 300 euros for legal defense fees

The tax treatment of expenses derived from the defense of a taxpayer's labor interests has been defined following a recent resolution from the tax authority. Workers who must hire legal services to resolve conflicts with their employers have the possibility of reducing their taxable base in their income tax return.

What the DGT has ruled

The Dirección General de Tributos (DGT) has determined that the fees of legal professionals defending a taxpayer's interests in disagreements with those who pay their employment income constitute legal defense expenses. According to the interpretation of current regulations, these amounts are deductible in Personal Income Tax (IRPF), including any accompanying VAT.

The resolution establishes two fundamental conditions for this expense to be admitted:

• Quantitative limit: The deduction is subject to a maximum cap of 300 euros per year.
• Temporality: The expense must be imputed in the period in which it becomes due.

What this means for you

If you have had to hire a lawyer to manage a dismissal process or any other conflict related to the receipt of your employment income, these fees can reduce the amount of your taxable base. This implies that the expense incurred has a direct impact on the calculation of your total tax liability in your income tax return.

It is important to note that deductibility applies specifically to the legal defense expenses provided for in Article 19.2 e) of Law 35/2006 (IRPF Law). Therefore, this is not a deduction for general expenses, but a specific expense linked to the protection of your rights against the payer of your income.

What you should do

To apply this tax benefit, it is necessary to have documentation that proves the professional nature of the service and the due date of the expense in the corresponding fiscal year. It is recommended to keep invoices that detail the concept of the legal defense and the VAT applied, ensuring that the total amount does not exceed the 300-euro limit established by the regulations.

Given that each labor conflict situation and its impact on the tax return may vary, it is necessary to assess each particular case to ensure the correct application of this tax criterion.