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V0320-23 20 February 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribución en especie

Company-paid medical insurance via payroll deduction may qualify as exempt benefits in kind

A company has requested clarification on whether medical insurance deducted from a worker's gross salary (flexible remuneration) qualifies as an exempt benefit in kind. The Directorate General for Tax (DGT) explains that if the company is the policyholder and the remuneration is stipulated in the contract, the exemption applies.

The question raised

Application of the exemption set forth in Article 42.3.c) of Law 35/2006.

The DGT's ruling

For health insurance to be considered exempt benefits in kind, the company must be the policyholder and the benefit must be stipulated in the employment contract or collective agreement. If the company only acts as a payment intermediary for an amount that the employee allocates to an expense, it is considered monetary remuneration. If the company is contractually obligated to provide the service, the payment to the third party is a benefit in kind, and the exemption limits of 500 euros (or 1,500 for persons with disabilities) apply.

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