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V0735-20 6 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rentas en especie

Medical insurance exemption does not apply if the full cost is passed on to the employee

An employee inquired whether the premium for a collective medical insurance policy, the cost of which is deducted from her salary, is exempt from Personal Income Tax (IRPF). The Directorate General for Tax (DGT) ruled that because the cost is passed on to the employee, there is no benefit in kind and therefore the exemption does not apply.

The question raised

Possible application of the exemption provided for in Article 42.3.c) of the Personal Income Tax Law.

The DGT's ruling

There is no benefit in kind regarding the insurance premium when the employing entity passes on the total cost to the employees through payroll deduction. As there is no benefit in kind, it is not possible to apply the exemption provided for in Article 42.3.c) of the Personal Income Tax Law (LIRPF).

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