Exemption from Personal Income Tax (IRPF) for hearing aid and eyewear allowances

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the taxation of financial allowances that companies grant to their employees to cover health expenses, specifically for items such as the purchase of hearing aids or glasses that are not covered by the public healthcare system.

What the DGT has ruled

The inquiry analyzes whether these financial benefits should be considered employment income subject to IRPF taxation. The ruling establishes that financial allowances intended for treatment or the restoration of health, provided they are expenses not covered by the Health Service or the Mutual Fund, are not considered income subject to tax.

However, the DGT makes a clear distinction to avoid erroneous interpretations:

• Exempt allowances: Those specifically intended for treatment or the restoration of health and which are not covered by public healthcare.
• Allowances subject to IRPF: Any other social benefit whose objective is to alleviate the recipient's economic situation and not healthcare assistance per se.
• Allowances for covered expenses: Allowances granted to cover health expenses that are already covered by the Health Service or the Mutual Fund are also subject to taxation.

What this means for you

For the employee, this implies that receiving financial compensation from the company to cover essential health items, such as glasses or hearing aids, does not increase their IRPF taxable base, provided the requirements of non-public coverage and health purpose are met. For companies, this ruling requires precise management of these benefits to ensure that the nature of the allowance is strictly health-related and not merely a social-character economic compensation.

What should be done

It is necessary to verify the nature of the allowance received and check whether the expense in question is covered by public healthcare or the corresponding mutual fund. Since the distinction between an allowance for health restoration and a social benefit of an economic nature is decisive for taxation, it is recommended to assess the documentation supporting the purpose of the benefit in each particular case.