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Practical manual for Income Tax 2023.

3. That there is no legal rule that expressly exempts said gain from taxation or makes it taxable as income.

We distinguish between:

A. Assumptions of capital gains exempt from taxation

Assumptions of capital gains exempt from taxation, the following may be cited, among others:

  • Compensation as a result of civil liability for personal damages in the amount legally or judicially recognized.

    See this exemption from article 7.d) Law IRPF in Chapter 2 of this Manual.

  • awards, expressly declared exempt.

    See this exemption from article 7.l) Law IRPF in Chapter 2 of this Manual.

  • Prizes from lotteries and bets organized by the State Lottery and Betting Society and by the Autonomous Communities, the Red Cross and the National Organization for the Blind, as well as those organized by certain public bodies or entities established in other Member States of the European Union or the European Economic Area, the total amount of which in the year 2023 is equal to or less than 40,000 euros or up to said amount in the case of prizes exceeding 40,000 euros.

    Prizes whose total amount exceeds 40,000 will be subject to taxation on the portion thereof that exceeds said amount.

    This exemption will apply provided that the amount of the tenth, fraction, lottery coupon or the bet placed is at least 0.50 euros . If is less than 0.50 euros , the maximum exempt amount will be reduced proportionally.

    In the event that the prize is jointly owned, the exempt amount will be prorated among the joint owners based on their corresponding share.

    Important : As of January 1, 2013, these prizes, which were completely exempt, will be subject to IRPF through a special tax of 20 percent that will be required independently for each tenth, fraction or lottery coupon or bet awarded (Additional Provision Thirty-third.2 of the IRPF Law ).

  • Compensation paid by Public Administrations for personal injury as a result of the operation of public services, when established in accordance with the procedures provided for in Laws 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations ( BOE of October 2) and 40/2015, of October 1, on the Legal Regime of the Public Sector ( BOE of October 2).

    See this exemption from article 7.q) of Law Personal Income Tax in Chapter 2 of this Manual.

B. Assumptions of capital gains that, by express provision of the Personal Income Tax Law, are taxed as income

As cases of capital gains that, by express provision of the Personal Income Tax Law , are taxed as income the following may be cited, among others:

  • Constitution or transfer of rights or powers of use or enjoyment over real estate, which are legally classified as income from real estate capital.

  • Securities or shares that represent participation in the equity of an entity, which constitute income from movable capital.

  • Transmission, reimbursement, amortization, exchange or conversion of any type of assets representing the raising and use of external capital, which only generate capital gains.

  • Results derived from capitalisation operations and life or disability insurance contracts, which give rise to income from movable capital, unless they come from social security systems, in which case they give rise to employment income.

    The social security systems whose benefits constitute employment income are detailed in Chapter 3 of this Manual.