Doctrine by topic · DGT Observatory

Legal Costs: 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 32 rulings · 2014–2026

Current position

The payment of legal costs is compensatory in nature and does not constitute consideration for services; therefore, there is no transaction subject to IVA (Value Added Tax) between the winning and the losing party. The lawyer must invoice their services to the winning party, who is the true recipient of the service. The losing party must pay the amount determined by the court, including the IVA on professional services, but has no right to receive an invoice or to deduct said tax.

The DGT's position has remained constant since 2014, reaffirming that legal costs are compensation and not a transaction subject to IVA between the parties. No doctrinal changes are observed in the sequence, except for a final ruling concerning the temporal imputation of income in IRPF (Personal Income Tax) and not regarding the nature of legal costs.

Analysis based on 31 of 32 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V2110-22 5 Oct 2022

Payment of legal costs compensation is not subject to VAT

SG de Impuestos sobre el Consumo
costas judicialesindemnizaciónbase imponiblerepercusiónprestación de servicios LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 5.1
Affects CompanyExpat · Non-residentIndividual
V0992-21 20 Apr 2021

Inability to deduct VAT from pro forma invoices or legal costs

SG de Impuestos sobre la Renta de las Personas Físicas
deducción de cuotafactura proformacostas judicialesnaturaleza indemnizatoriadocumento justificativo LIVA — Ley 37/1992 del IVA art. 97LIVA — Ley 37/1992 del IVA art. 164.Uno.3º
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
V2958-18 14 Nov 2018

Legal costs must include VAT on professional legal defence services

SG de Impuestos sobre el Consumo
costas judicialesindemnizaciónbase imponibleprestación de serviciossujeto pasivo LIVA — Ley 37/1992 del IVA art. 4.unoLIVA — Ley 37/1992 del IVA art. 5.uno.a)
Affects CompanyExpat · Non-residentIndividual
V0877-18 3 Apr 2018

Legal costs are recognised upon accrual and are not subject to VAT

SG de Impuestos sobre las Personas Jurídicas
costas judicialesdevengoimputación de ingresosnaturaleza indemnizatoriasujeción al impuesto LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 10.3LIS — Ley 27/2014 del Impuesto sobre Sociedades art. 11.1
Affects CompanyExpat · Non-residentIndividual
V2314-17 13 Sept 2017

VAT should not be declared or charged on legal costs in forms 390 and 347

SG de Impuestos sobre la Renta de las Personas Físicas
costas judicialesindemnizacióncontraprestaciónbase imponibledestinatario de la prestación LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 78.3.1º
Affects CompanyExpat · Non-residentIndividual
V4930-16 15 Nov 2016

Legal costs paid by the losing party are not subject to VAT

SG de Impuestos sobre el Consumo
costas judicialesindemnizaciónbase imponiblecontraprestacióndestinatario de la prestación LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 78.3.1º
Affects CompanyExpat · Non-residentIndividual

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