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Assessment of 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 9 rulings · 2014–2026

Current position

The payment of the court-ordered legal costs constitutes compensation to the winning party and not a consideration for services. Therefore, there is no VAT impact and no obligation to issue an invoice to the losing party. The professional must invoice their services to the winning party, who is the true recipient of the service. The losing party must pay the total amount determined by the judge, including the VAT of the services provided to the winner.

The DGT's position has remained constant since 2015. The criterion establishes that the court-ordered legal costs are compensation and not an operation subject to VAT between the loser and the winner. The rulings repeatedly confirm that the invoice must be issued to the client (the winner) and that the loser has no right to deduction nor an obligation for IRPF (Personal Income Tax) withholding.

Turning points

  1. V1548-16

    Clarifies that the amount of the compensation for legal costs must be included in the tax base of Corporate Tax (IS) when the judgment becomes final.

Analysis based on 8 of 9 rulings with a stated position. Updated 29 September 2026.

Rulings on this topic

9
V0884-26 22 Apr 2026

Payment of costs judgment not subject to VAT as it is compensatory

SG de Impuestos sobre el Consumo
condena en costasindemnizaciónbase imponibleprestación de serviciostasación de costas LIVA — Ley 37/1992 del IVA art. 4.unoLIVA — Ley 37/1992 del IVA art. 4.dos
Affects CompanyExpat · Non-residentIndividual

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