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Taxation of legal compensation in Spain

Taxation of legal compensation in Spain

Old Aug 20th 2014, 10:17 pm
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njf
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Default Taxation of legal compensation in Spain

I hope our tax expert may be able to help me on a question.

I am currently suing a former medical practitioner in the UK for negligence. If I agree a compensation deal with his insurers, is that tax free in Spain, like it would be in the UK? I am currently non-resident but will become tax resident next year. If there is a possibility any damages would be taxed in Spain, I may need to consider settling this year and, maybe, not getting such a good deal.

TIA

Last edited by njf; Aug 20th 2014 at 11:31 pm.
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Old Aug 21st 2014, 7:34 am
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Default Re: Taxation of legal compensation in Spain

There are all sorts of exemptions for compensation payments, many related to working, ie redundancy, unfair dismissal, etc and these may have limits to the amount that is tax exempt.

There is, however a paragraph in the tax guide that says that compensation payments as a result of a judicial process are exempt in full.

I would expect your compensation to fall in that category and hence be exempt.

However, I would be inclined to talk to a professional tax advisor to be absolutely sure.
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Old Aug 21st 2014, 6:51 pm
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Default Re: Taxation of legal compensation in Spain

Originally Posted by Fred James
There are all sorts of exemptions for compensation payments, many related to working, ie redundancy, unfair dismissal, etc and these may have limits to the amount that is tax exempt.

There is, however a paragraph in the tax guide that says that compensation payments as a result of a judicial process are exempt in full.

I would expect your compensation to fall in that category and hence be exempt.

However, I would be inclined to talk to a professional tax advisor to be absolutely sure.
Thanks for your, as always, very helpful answer.
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