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V0020-14 10 January 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Health grants for medical recovery may be excluded from Personal Income Tax (IRPF)

A company has requested clarification on whether health grants provided through its Social Action Plan are subject to Personal Income Tax (IRPF) withholding. The Directorate General for Taxes (DGT) has ruled that these grants are only exempt if they are specifically intended for medical treatment or health recovery and cover expenses not provided for by the National Health Service or mutual insurance.

The question raised

Whether such aid shall be subject to withholding under Personal Income Tax.

The DGT's ruling

Financial aid constitutes income from employment, except for those granted for medical expenses not covered by the Health Service or Mutual Fund and intended for treatment or the restoration of health. If the aid is intended to alleviate the recipient's economic situation, it constitutes income subject to tax. Aid for ocular, dental, auditory, orthopedic, speech therapy and phoniatrics, or diabetes treatments is excluded from taxation if it meets the aforementioned health requirements.

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