Thereduction of legal expensesin the income statement they are not without controversy. According to the Tax Agency, the amount obtained in lawsuits or arbitration agreements corresponding legal costs must be declared as capital gain. However, the expenses derived from this processcannot be deducted as costs.

In order to analyze these assumptions, article 33-EDL 2006/298871 must be taken into account. In its first section it indicates thatcapital gains and losses are changes in the taxpayer’s equity. If we follow this rule, the amount that a citizen receives as costs related to a judicial proceeding in his favor must be indicated as capital gain that must be declared in the personal income tax. This amount will be added to your impossible base and will be paid to the Treasury based on this amount.

The expenses generated by this procedure, such aspayment to lawyers and the attorney represent a decrease in the assets of the citizen, but can not be declared loss of capital or loss of profit as it involves payment for a service.

In recent months, theclaims for mortgages linked to the IRPH index, multi-currency mortgages or floor clauses. These sentences have brought hundreds of citizens to court to claim the money they have overpaid during this time.

In case of winning their judgment, these citizens must declare in the rent that amount that they have returned, but they will not be able to deduct the costs that they have had in the judicial process such as the payment of the lawyers.

What procedure can I declare?

The citizensonly expenses related to labor defense may be deductedin legal proceedings for dismissal, termination of contract or claim of amounts.

The amount that citizens can deduct will be theamounts paid for such expenses, with a limit of 200 euros in both individual and joint taxation. In order to access this tax relief, you must indicate in the same section of earnings from work the amounts paid in the tax period for the expenses of legal defense of the employment relationship.

What can I declare as autonomous?

TheThe self-employed may include the expenses derived from legal defense of their economic or professional activity.. It must always be related to your business activity and whenever it is taxed in direct estimation, that is, your income for which you are taxed is the result of subtracting from your gross profit the expenses derived from your activity. This is the main point, you have to show that these lawsuits or claims that have originated a judicial expense is derived from your economic or professional activity, and, of course, be supported by an invoice.

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