VAT treatment of the Court decision of payment the trial costs


Binding tax ruling V2176-17, issued by the Spanish General Tax Sub-directorate last August 22, 2017.

The consultant is the lawyer of the prevailing party in a proceeding in which the judge has condemned costs to the other party.

This Attorney wants to know the VAT treatment of the condemnation to pay the judicial costs and expenses.

This Body, based on a previous binding tax ruling and jurisprudence of the Spanish Supreme Court, understands that the client should be considered as the recipient of the provision of services rendered by the lawyer. Therefore, the consultant must invoice his services to the client, charging the corresponding VAT quota at the standard VAT rate of 21%.

With respect to the payment of the condemnation costs by the losing party of the process to the winning party of the same, due to its nature of compensation, it is not subject to VAT then, no formal invoice must be issued for this, without prejudice to the issue of any other document that justifies the payment of the corresponding amount including the VAT quota satisfied by the prevailing party of the process.

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CV 2176 17

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