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V0246-23 14 February 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas en especie

Insurance premiums covering non-work-related risks constitute benefits in kind

A query was raised regarding whether premiums for professional civil liability insurance and accident insurance (which also covers private life) should be taxed as benefits in kind. The DGT ruled that accident insurance constitutes income in kind, as it covers risks unrelated to professional activity.

The question raised

Whether it is appropriate to apply withholding tax on the payroll of employees for the amounts paid under the aforementioned insurance contracts.

The DGT's ruling

In order for insurance premiums not to be considered benefits in kind, they must cover solely and exclusively the risk of occupational accident or civil liability in the performance of professional duties. If the policy covers risks or contingencies outside the scope of professional activity, or includes family members, it constitutes a benefit in kind. In this case, the proposed accident insurance covers private life, and therefore does not meet the requirements of Article 42.2.b) of the LIRPF.

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