Doctrine by topic · DGT Observatory

Out-of-court settlement: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 12 rulings · 2014–2026

Current position

Compensation for civil liability for personal injury is only exempt if the amount is legally or judicially recognized. Direct out-of-court settlements between the parties do not benefit from this exemption. In cases of employment income, out-of-court settlements do not allow for the application of the 30% reduction for irregularity, as they do not derive from a modification of economic perceptions of indefinite duration.

The DGT's position remains constant in excluding out-of-court settlements from specific tax benefits. A rigorous application is observed regarding the necessity of judicial intervention for the exemption for personal injury (V0376-14 and V0526-26) and the existence of a generation period for the reduction for irregularity (V0858-20 and V1332-20).

Analysis based on 11 of 12 rulings with a stated position. Updated 27 September 2026.

Rulings on this topic

12

V0526-26 5 Mar 2026

Out-of-court personal injury compensation not exempt from IRPF

SG de Impuestos sobre la Renta de las Personas Físicas

indemnizaciónresponsabilidad civilrenta exentadaños personalesacuerdo extrajudicial LIRPF — Ley 35/2006 del IRPF art. 7.dLGT — Ley 58/2003 General Tributaria art. 10.2

Affects CompanyExpat · Non-residentIndividual

V1175-25 1 Jul 2025

When to report salary difference compensation depends on judicial or agreement basis

SG de Impuestos sobre la Renta de las Personas Físicas

imputación temporalrendimientos del trabajoexigibilidadresolución judicialacuerdo extrajudicial LIRPF — Ley 35/2006 del IRPF art. 14.1.aLIRPF — Ley 35/2006 del IRPF art. 14.2.a

Affects CompanyExpat · Non-residentIndividual

V2485-24 9 Dec 2024

30% tax reduction inapplicable to truck cartel compensation

SG de Impuestos sobre la Renta de las Personas Físicas

rendimientos de actividades económicasreducción por irregularidadimputación temporalacuerdo extrajudicialperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 32.1Reglamento del Impuesto

Affects CompanyExpat · Non-residentIndividual

V1853-22 3 Aug 2022

Price modification following out-of-court settlement requires VAT taxable base rectification

SG de Impuestos sobre el Consumo

base imponiblerectificación de cuotasdevengoacuerdo extrajudicialprestación de servicios LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 5.1

Affects CompanyExpat · Non-residentIndividual

V0579-22 21 Mar 2022

Out-of-court settlements for preterition or disinheritance are taxed as 'inter vivos' gratuitous transfers

SG de Impuestos Patrimoniales, Tasas y Precios Públicos

pretericióndesheredacióntransmisión lucrativaintervivosmortis causa LISD — Ley 29/1987 de Sucesiones y Donaciones art. 3.1.bLISD — Ley 29/1987 de Sucesiones y Donaciones art. 5

Affects CompanyExpat · Non-residentIndividual

V2423-21 20 Sept 2021

Financial compensation from out-of-court settlement with a bank is taxed as a capital gain

SG de Impuestos sobre la Renta de las Personas Físicas

ganancia patrimonialacuerdo extrajudicialintereses indemnizatoriosbase imponible del ahorroresarcimiento de gastos LIRPF — Ley 35/2006 del IRPF art. 25LIRPF — Ley 35/2006 del IRPF art. 33.1

Affects CompanyExpat · Non-residentIndividual

V0183-21 4 Feb 2021

Legal and solicitor fees cannot be deducted from compensation received

SG de Impuestos sobre la Renta de las Personas Físicas

ganancias y pérdidas patrimonialesindemnizacióngastos de abogado y procuradorrenta al consumoacuerdo extrajudicial LIRPF — Ley 35/2006 del IRPF art. 33LIRPF — Ley 35/2006 del IRPF art. 33.1

Affects CompanyExpat · Non-residentIndividual

V1332-20 11 May 2020

30% reduction not applicable to settlements reached via out-of-court agreement in this case

SG de Impuestos sobre la Renta de las Personas Físicas

rendimientos del trabajoreducción del 30%rendimientos notoriamente irregularesacuerdo extrajudicialperíodo de generación LIRPF — Ley 35/2006 del IRPF art. 17.1LIRPF — Ley 35/2006 del IRPF art. 18.2

Affects CompanyExpat · Non-residentIndividual

V0858-20 15 Apr 2020

30% reduction cannot be applied to income obtained in a notoriously irregular manner

SG de Impuestos sobre la Renta de las Personas Físicas

rendimientos del trabajoreducción del 30%notoriamente irregularindemnizaciónperiodo de generación LIRPF — Ley 35/2006 del IRPF art. 18.2RIRPF — RD 439/2007, Reglamento del IRPF art. 12.1

Affects CompanyExpat · Non-residentIndividual

V3270-19 27 Nov 2019

Compensation for material and non-material damages via out-of-court settlement is taxable as a capital gain

SG de Impuestos sobre la Renta de las Personas Físicas

indemnizacióndaños moralesdaños materialesganancia patrimonialexención LIRPF — Ley 35/2006 del IRPF art. 7.d)LIRPF — Ley 35/2006 del IRPF art. 31.1

Affects CompanyExpat · Non-residentIndividual

V2962-18 15 Nov 2018

Sale of shares following conversion and extrajudicial payments are taxed independently

SG de Tributación de las Operaciones Financieras

ganancia patrimonialpérdida patrimonialrendimiento del capital mobiliariobase imponible del ahorroobligaciones subordinadas LIRPF — Ley 35/2006 del IRPF art. 25.2LIRPF — Ley 35/2006 del IRPF art. 33.1

Affects CompanyExpat · Non-residentIndividual

V0376-14 13 Feb 2014

Exemption from personal injury compensation requires judicial oversight of out-of-court settlements

SG de Impuestos sobre la Renta de las Personas Físicas

indemnizaciónresponsabilidad civildaños personalesexenciónganancia patrimonial LIRPF — Ley 35/2006 del IRPF art. 7.dLIRPF — Ley 35/2006 del IRPF art. 14.1.c

Affects CompanyExpat · Non-residentIndividual

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