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V1541-20 22 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del trabajo

Healthcare subsidies for non-Social Security covered costs may be exempt from income tax and wealth tax

A mutual inquires whether healthcare improvements for injured workers are subject to income tax and wealth tax. The Tax Authority responds that such subsidies are not taxable if they are intended for treatment or recovery and are not covered by Social Security.

The question raised

Tax treatment of said grants in the Personal Income Tax and in the Non-Resident Income Tax in the event that the beneficiaries thereof are considered non-residents in Spanish territory.

The DGT's ruling

Grants are considered income from employment, but they are not taxable if they are granted to cover medical expenses not covered by the Health Service or Mutual Fund and are intended for treatment or the restoration of health. If the purpose is to alleviate the recipient's economic situation, they do constitute income. In the Non-Resident Income Tax (IRNR), they shall follow the same classification as in the Personal Income Tax (IRPF), being taxable in Spain if the work is performed in Spanish territory and they do not meet the exemption requirements.

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