Doctrine by topic · DGT Observatory

Compensatory Nature: 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 31 rulings · 2014–2026

Current position

Amounts received as compensation, such as payments for free legal assistance, disciplinary fines, or security deposits for damages, do not constitute consideration for an operation. Therefore, they are not subject to IVA (Value Added Tax) as there is no reciprocal exchange of benefits. In IRPF (Personal Income Tax), late payment interest with a compensatory purpose is classified as capital gains and not as income from movable capital.

The DGT maintains a consistent position in distinguishing between payments that constitute consideration for services and those that are compensatory in nature. Throughout various rulings, this criterion has been applied both to classify late payment interest as capital gains and to exclude amounts responding to sanctions or compensations without reciprocity from the scope of IVA.

Turning points

  1. V2912-14

    Establishes that late payment interest for tax refunds is compensatory interest and must be taxed as capital gains.

  2. V2507-19

    Determines that a security deposit provided to compensate for damages is compensatory in nature and is not consideration subject to IVA.

Analysis based on 31 of 31 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V0827-26 17 Apr 2026

Legal services in public duty not VAT liable or subject to invoicing

SG de Impuestos sobre el Consumo
asistencia jurídica gratuitaturno de oficiocarácter indemnizatoriooperación no sujetaobligación de facturación LIVA — Ley 37/1992 del IVA art. 6LIVA — Ley 37/1992 del IVA art. 78.1
Affects CompanyExpat · Non-residentIndividual
V1323-25 15 Jul 2025

Mora interest for wage claims taxed as patrimonial gain

SG de Impuestos sobre la Renta de las Personas Físicas
intereses de moraganancia patrimonialrendimientos del capital mobiliariocarácter indemnizatoriobase imponible general LIRPF — Ley 35/2006 del IRPF art. 25LIRPF — Ley 35/2006 del IRPF art. 33.1
Affects CompanyExpat · Non-residentIndividual
V0144-24 16 Feb 2024

No obligation to file VAT returns if only free legal aid is provided

SG de Impuestos sobre el Consumo
asistencia jurídica gratuitaoperaciones no sujetascarácter indemnizatoriodeclaración-liquidaciónturno de oficio LIVA — Ley 37/1992 del IVA art. 1LIVA — Ley 37/1992 del IVA art. 4
Affects CompanyExpat · Non-residentIndividual
V2313-23 9 Aug 2023

Free legal aid and rental exemptions from VAT

SG de Impuestos sobre el Consumo
asistencia jurídica gratuitaoperaciones no sujetasexención de arrendamientoderecho a la deduccióncarácter indemnizatorio LIVA — Ley 37/1992 del IVA art. 4LIVA — Ley 37/1992 del IVA art. 5.1.c
Affects CompanyExpat · Non-residentIndividual
V0418-22 3 Mar 2022

Free legal assistance not subject to VAT, taxed as professional income

SG de Impuestos sobre la Renta de las Personas Físicas
asistencia jurídica gratuitacarácter indemnizatoriono sujeciónrendimientos de actividad económicaestimación directa LIVA — Ley 37/1992 del IVA art. 4LIVA — Ley 37/1992 del IVA art. 5.1.a
Affects CompanyExpat · Non-residentIndividual
V0022-19 3 Jan 2019

Legal aid services exempt from VAT since 1 January 2017

SG de Impuestos sobre el Consumo
asistencia jurídica gratuitacarácter indemnizatoriono sujeciónturno de oficiocontraprestación LIVA — Ley 37/1992 del IVA art. 1LIVA — Ley 37/1992 del IVA art. 4
Affects CompanyExpat · Non-residentIndividual
V3105-17 30 Nov 2017

Payment of legal interest via court ruling deemed a computable capital loss

SG de Impuestos sobre la Renta de las Personas Físicas
pérdida patrimonialintereses legalesimputación temporalalteración patrimonialcarácter indemnizatorio LIRPF — Ley 35/2006 del IRPF art. 14.1 cLIRPF — Ley 35/2006 del IRPF art. 33.1
Affects CompanyExpat · Non-residentIndividual
V1210-16 28 Mar 2016

Late payment interest is taxed as capital gains within the savings tax base

SG de Impuestos sobre la Renta de las Personas Físicas
intereses de demoraganancias patrimonialesrendimientos del capital mobiliariobase imponible del ahorrocarácter indemnizatorio LIRPF — Ley 35/2006 del IRPF art. 14.1 cLIRPF — Ley 35/2006 del IRPF art. 25
Affects CompanyExpat · Non-residentIndividual

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