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V3143-21 17 December 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · retribución en especie

Company-paid health insurance premiums may be exempt from Income Tax if agreed as benefits in kind

A query was raised regarding whether a monthly health insurance premium of 50 euros paid by a company for an employee is exempt from Income Tax (IRPF). The Directorate General for Tax (DGT) ruled that the exemption applies provided the company is the policyholder and the benefit in kind is stipulated in the employment contract or collective agreement.

The question raised

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

The DGT's ruling

For health insurance premiums to be exempt, the company must be the policyholder and the benefit in kind must be stipulated in the employment contract or collective agreement. If the company only reimburses the premiums of an insurance policy contracted by the employee, it is considered monetary remuneration subject to withholding tax. The exemption is limited to 500 euros per year per person (or 1,500 euros if the person has a disability).

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