Doctrine by topic · DGT Observatory

Damages and Losses: 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 18 rulings · 2014–2024

Current position

The tax classification of compensation for damages and losses depends on its substitutive nature. If they substitute salaries, they are taxed as income from employment. If they substitute income from economic activities or alter the composition of assets without being a transfer, they are integrated as capital gains. Late payment interest with an indemnificatory nature is considered a capital gain.

The DGT maintains a constant position based on the nature of the compensated amount. It has been specified that compensation substituting salaries constitutes income from employment and that late payment interest has the character of a capital gain. No change in criterion is observed, but rather a systematic application of the nature of the amount received.

Turning points

  1. V0549-16

    Establishes that legal interest with an indemnificatory nature is classified as capital gains integrated into the savings base.

  2. V1532-24

    Clarifies that compensation for unpaid salaries is income from employment and that late payment interest constitutes capital gains.

Analysis based on 16 of 18 rulings with a stated position. Updated 25 September 2026.

Rulings on this topic

18
V1473-18 30 May 2018

Damages for inability to use premises are not subject to VAT

SG de Impuestos sobre el Consumo
indemnizacióndaños y perjuicioscontraprestaciónacto de consumoprestación de servicios LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 5.1.a)
Affects CompanyExpat · Non-residentIndividual
V0549-16 10 Feb 2016

Compensation for crop loss taxed as business income and interest as capital gains

SG de Impuestos sobre la Renta de las Personas Físicas
rendimientos de actividades económicasganancias patrimonialesintereses indemnizatoriosbase imponible del ahorrodaños y perjuicios LIRPF — Ley 35/2006 del IRPF art. 25LIRPF — Ley 35/2006 del IRPF art. 27.1
Affects CompanyExpat · Non-residentIndividual
V2468-14 23 Sept 2014

Damages and compensation are not subject to VAT

SG de Impuestos sobre el Consumo
indemnizaciónbase imponibleprestación de servicioshecho imponibledaños y perjuicios 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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