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V1213-18 10 May 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo en especie

Medical insurance exemption cannot be applied by a director and majority shareholder of a company

A query was raised regarding whether a director and shareholder holding 90% of the capital could apply the health insurance exemption to their personal income tax (IRPF). The Directorate General for Taxes (DGT) ruled that this is not possible because no employment relationship exists with the company.

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

The exemption for health insurance premiums requires the beneficiary to be an employee. The administrator and majority shareholder (90%) does not provide services within the framework of an employment relationship, but is instead under the self-employed regime due to performing management functions and possessing effective control. Therefore, the premiums paid by the company must be classified as benefits in kind from employment income.

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