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V1459-24 17 June 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribución en especie

Medical insurance premium exemption only applies to the portion paid by the employer as benefits in kind

An employee inquired whether medical insurance premiums paid by their company for themselves and their family are exempt from Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that the exemption only applies to the portion assumed by the company as agreed benefits in kind, and not to the portion deducted from the employee's salary.

The question raised

Consideration of salary in kind and the possible application of the exemption provided for in Article 42.3.c) of the Personal Income Tax Law.

The DGT's ruling

The exemption under Article 42.3.c) of the Personal Income Tax Law (LIRPF) applies to premiums assumed by the company as agreed-upon benefits in kind, provided they do not exceed the legal limits. The portion of the premium that the company pays on behalf of the employee (by deducting it from their payroll) does not constitute a benefit in kind, but rather a payment mediation of monetary earnings. Therefore, the exemption only applies to the portion of the premium that the company directly bears as part of the remuneration.

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