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Loss of Profits: 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

Refined position High confidence 29 rulings · 2014–2026

Current position

Loss of profits does not constitute personal injury and does not benefit from the exemption under article 7.d) of the LIRPF (Personal Income Tax Law). If it compensates for unpaid wages, it qualifies as employment income and is imputed to the period in which the judgment becomes final, allowing for the 30% reduction for periods exceeding two years. If it compensates for rental income, it is income from real estate capital, and if it compensates for income from an economic activity, it is income from said activity.

The DGT's position has evolved from a generic classification of patrimonial damages as gains or income from an economic activity towards a specific distinction based on the nature of the substituted income. The most recent rulings specify that loss of profits due to wages is employment income and not exempt personal injury. There is no observed change in criterion, but rather a greater specialization in the classification according to the source of the lost income.

Turning points

  1. V1195-25

    Establishes that loss of profits due to wages is not personal injury and specifically qualifies as employment income according to article 17.1 LIRPF.

Analysis based on 27 of 29 rulings with a stated position. Updated 24 September 2026.

Rulings on this topic

24
V1577-21 26 May 2021

Damages in lease agreements are not subject to VAT

SG de Impuestos sobre el Consumo
base imponibleindemnizacióncontraprestaciónprestación de servicioslucro cesante LIVA — Ley 37/1992 del IVA art. 78LGT — Ley 58/2003 General Tributaria art. 89.1
Affects CompanyExpat · Non-residentIndividual
V3147-17 5 Dec 2017

Tax treatment of compensation for damage to assets and loss of profits

SG de Impuestos sobre la Renta de las Personas Físicas
ganancias y pérdidas patrimonialeslucro cesanterendimientos de actividades económicasvalor de adquisiciónindemnización LIRPF — Ley 35/2006 del IRPF art. 32.1LIRPF — Ley 35/2006 del IRPF art. 33
Affects CompanyExpat · Non-residentIndividual

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