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V0422-19 27 February 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribución en especie

Tax treatment of health insurance premiums: benefits in kind or payment mediation

An employee inquired whether the company's payment of health insurance premiums for themselves and their children constitutes a benefit in kind. The DGT ruled that the payment of the employee's own premium is a benefit in kind if agreed upon, whereas the payment of children's premiums, when deducted from the employee's net pay, constitutes payment mediation.

The question raised

Application of Article 42.3.c) of Law 35/2006.

The DGT's ruling

Health insurance premiums paid by the company for the employee constitute benefits in kind if they are agreed upon in the contract or collective agreement, being exempt up to 500 euros annually. If the company pays the premiums for the children but deducts the amount from the employee's net salary, it is considered a payment mediation and not a benefit in kind. In this second case, the payment is considered an application of the employee's monetary income to cover an expense.

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