A victory in the Courts will mean a new weight in our pocket
As numerous sources have been reporting in recent months, the General Directorate of Taxes (DGT), has issued a new tax criterion to apply in relation to the Personal Income Tax (IRPF), by those taxpayers who, within a judicial proceeding, obtain an estimate resolution from which a right derives, not only to an acknowledgment of the petition claimed, but also to the Court costs that, on a regular basis, they are imposed on the “overdue” party and that, in short, they are the fees of both the lawyer and the attorney, experts and other expenses that have been generated throughout the procedure to the “winning” party .
In the month of May, the Union of Technicians of the Ministry of Finance (GESTHA) communicated the decision taken by the DGT, to include the amounts received as procedural costs in the IRPF General Liquidable Base, paying in concept of Capital gains not derived from transfer of assets.
The course of this decision has its origin in numerous resolutions adopted by the DGT, in relation to the tax consequences of the declaration of nullity of the purchase of the so-called participations PREFERENTS, being the most enlightening among all of them, the Binding Consultation V0675-16, of February 18, 2016, which establishes doctrine by stating that the tax incidence of the coasts "It is given by its restorative nature of the defense and representation expense incurred by the winning party in a trial, which implies the incorporation of a credit in its favor or money, as soon as the credit right is exercised, thus constituting , a capital gain, in accordance with the provisions of the Article 33.1 of Law 35/2006, of Personal Income Tax". In other words, when considering compensation for tax purposes, the procedural costs will be considered a capital gain subject to tax in the Personal Income Tax.
But this, that is not the only surprise, since in addition the perceiving part of the procedural costs, will not have the right to practice the deduction of the expenses that his defense and representation have caused him. That is, they cannot deduct their own costs since, in the opinion of the DGT, they entail an expense derived from consumption and, therefore, are not deductible (Section 5 of Article 33 of the Personal Income Tax Law).
Looking at the other side of the coin, and as a “consolation prize”, for the defeated party, the DGT considers that the costs constitute for this part a capital loss when it is understood that they imply an involuntary decrease in its assets and, therefore, not attributable as a loss due to consumption.
So, litigating gentlemen already know, everything in this life has one of lime and one of sand.
Fernando Remolar Copovi.
Tax Area Assistant
