Doctrine by topic · DGT Observatory

Exempt Income: 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 52 rulings · 2014–2026

Current position

Compensation for civil liability for personal damages (physical, psychological, or moral) is exempt according to article 7.d) of the LIRPF (Personal Income Tax Law). It is an indispensable requirement that the amount be legally or judicially recognized. Out-of-court settlements reached directly between the parties do not meet this requirement of legal or judicial recognition.

The DGT's position has moved from treating default interest as non-exempt (V1208-18) to considering it exempt if the principal compensation is exempt (V1087-20). However, the doctrine has tightened regarding the requirement for the amount, demanding legal or judicial recognition for the exemption, expressly excluding direct out-of-court settlements (V0526-26).

Turning points

  1. V1087-20

    Establishes that compensatory interest for delay in the payment of an exempt compensation also enjoys the exemption.

  2. V0526-26

    Clarifies that an out-of-court settlement reached directly between the parties does not qualify for the exemption as it is not legally or judicially recognized.

Analysis based on 51 of 52 rulings with a stated position. Updated 19 September 2026.

Rulings on this topic

24
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 exentaacuerdo extrajudicialdaños personales LIRPF — Ley 35/2006 del IRPF art. 7.dLGT — Ley 58/2003 General Tributaria art. 10.2
Affects CompanyExpat · Non-residentIndividual
V2996-23 14 Nov 2023

Exemption from subsidy may exempt from filing form 184

SG de Tributos
atribución de rentasmodelo 184renta exentasubvencióndeclaración informativa LIRPF — Ley 35/2006 del IRPF art. 8.3LIRPF — Ley 35/2006 del IRPF art. 87.1
Affects CompanyExpat · Non-residentIndividual
V2279-21 12 Aug 2021

Enhanced redundancy payments are subject to Income Tax as employment income

SG de Impuestos sobre la Renta de las Personas Físicas
indemnización por despidomejora indemnizatoriarenta exentarendimiento del trabajoreducción por irregularidad LIRPF — Ley 35/2006 del IRPF art. 7.eLIRPF — Ley 35/2006 del IRPF art. 18.2
Affects CompanyExpat · Non-residentIndividual

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