Taxable Benefits

General tax treatment

Employer-paid voluntary (private) health insurance premiums are non-taxable for employees up to BGN 60 / ~EUR 30.68 per month. Amounts above the threshold are treated as taxable employment income and trigger either a 10% fringe benefit tax at the company level, or regular taxation (income tax and social security contributions) at the employee level, depending on how the benefit is structured.

Employers

Are employers in this country subject to any local tax obligations in connection with providing health benefits to employees?

Employer-paid premiums for voluntary health insurance qualify as a fringe benefit under the Corporate Income Tax Act (CITA) if:

They are provided as a benefit in kind (not cash)
They are provided to all employees and directors

They are exempt from the 10% tax on expenses if:

Premiums do not exceed BGN 60 / ~EUR 30.68 per month per employee
The employer has no coercively enforceable public obligations outstanding at the end of the month the expense is charged

The excess above BGN 60 / ~EUR 30.68, or the full amount if the qualifying conditions are not met, is subject to a 10% tax on expenses at the employer level.

This exemption covers supplementary voluntary health, life and pension insurance in aggregate - not each separately.

If the benefit qualifies as a fringe benefit under CITA, no social security contributions apply on the premiums regardless of amount.

Employers must report both taxable and non-taxable social expenses in their regular monthly and annual returns.

Residents

What is the tax treatment of employer-provided health benefits for employees?

If the conditions for fringe benefit treatment under CITA are not met, premiums are treated as employment income under the Personal Income Tax Act (PITA). Under PITA, premiums are excluded from an employee's taxable income up to BGN 60 / ~EUR 30.68 per month.

This exemption covers supplementary voluntary health, life and pension insurance in aggregate - not each separately.

Premiums above BGN 60 / ~EUR 30.68 per month are treated as taxable employment income and subject to both personal income tax and social security contributions.

Local taxes / Deductibility

Bulgaria has no local or municipal income taxes on employment or fringe benefits. Employer-paid voluntary health insurance premiums are deductible as a business expense for corporate income tax purposes. Premiums up to BGN 60 / ~EUR 30.68 per employee that qualify for the fringe benefit exemption under CITA are deductible without attracting the 10% tax on expenses. Premiums above BGN 60 / ~EUR 30.68 are also deductible, but the 10% tax on expenses applies to the excess at the corporate level.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Croatia, employers may give employees certain benefits that qualify as non-taxable and this includes premiums for supplementary and additional health insurance paid and born by the employer (up to HRK 2,500 per year). If this benefit exceeds the prescribed limits, the difference is considered to be salary and is subject to PIT, municipal tax, and employer’s and employee’s social security contributions.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Employers are required to pay PIT, municipal tax, and employer’s and employee’s social security contribution if this benefit exceeds the prescribed limits, as the difference is considered to be salary.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Estonia, all employer sponsored benefits are considered taxable income for employees.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

In Estonia, fringe benefit is the income of the recipient (employee) but paying income and social tax on the fringe benefit is the obligation of the person granting the benefit (employer). Fringe benefits i.e. benefits provided by the employer to the employee are subject to income tax at a rate of20/80 and social tax at a rate of 33%.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

According to the German tax law, some fringe benefits are mandatory, and some are optional. Health benefits such as health insurance are considered mandatory in Germany and generally considered taxable income. However, there are some exceptions such as health insurance premiums paid by the employer. These benefits are given a notional cash value, so they may be processed via the payroll calculation and subjected to tax and, in some cases, social insurance contributions.

Rate/assessment: The standard way of determining the cash value of a benefit is fair market value. If the employee contributes toward the cost of the benefit then the contribution is deducted from the fair market value assessment.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered to be income, benefits in kind are subject to income tax.

General tax treatment

Employer-paid private health insurance premiums are exempt from PIT and NSIC if the premium does not exceed EUR 750 per year per employee and does not exceed 10% of the employee's gross annual salary - both conditions must be met. Premiums within this threshold are deductible for the employer. Any amount above the threshold is treated as taxable employment income.

Residents

What is the tax treatment of employer-provided health benefits for employees?

Premiums are non-taxable if two cumulative conditions are met: (1) the annual premium per employee does not exceed EUR 750, and (2) the premium does not exceed 10% of the employee's gross annual salary. This cap applies to the combined total of health, life, and accident insurance premiums - not to each policy separately. If either condition is breached, the full premium becomes taxable employment income subject to regular PIT rates.

Employers

Are employers in this country subject to any local tax obligations in connection with providing health benefits to employees?

Premiums within the EUR 750 / 10%-of-gross-salary threshold are excluded from the NSIC base. If the threshold is exceeded, the excess is added to taxable employment income and subject to full NSIC. The employer withholds and remits both PIT and NSIC via the VID Electronic Declaration System by the 17th of the following month. There is no separate fringe benefit tax - benefits above exemption thresholds are taxed through standard payroll withholding.

Local taxes / Deductibility

No separate municipal or local tax applies to employer-paid health insurance premiums.

Premiums within the EUR 750 / 10% threshold are deductible as regular company expenses based under Section 8(5)(1) of the Enterprise Income Tax Law and not subject to additional tax. Premiums above the threshold remain deductible as employment costs since they are included in the employee's taxable salary.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Lithuania, health insurance paid by an employer on behalf of an employee is not considered as a taxable benefit for PITpurposes if certain conditions are met and provided that the total amount of such contributions does not exceed 25% of the employee's annual employment-related income and the recipient of such contributions is established in an EEA country.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Luxembourg, employment benefits such as healthcare schemes or salary sacrifice schemes are generally taxable. This is based on the general principle that the benefits, both in cash and in kind, made available to the employee are considered as income and must therefore be subject to tax.

Rate/assessment: These benefits in kind are usually assessed at their market value, but some are instead given a lump-sum valuation.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered income, benefits in kind are subject to income tax.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In the Netherlands, within an employment relationship, all benefits in kind such as health benefits are, in principle, considered as taxable income.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered income, benefits in kind are subject to income tax.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Portugal, in general, benefits in kind provided by an employer are subject to Personal Income Tax (PIT) at the employee level. In the case of health or life insurance, those can be exempt if established for the majority of the employees and in an objective and identical criteria for all employees, while not belonging to the same professional class.

Rate/assessment: PIT is determined with reference to the income earned, the corresponding rate being applied according to the relevant band and taking the deductions laid down by law into account (e.g. education or health
expenditure).

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered income, benefits in kind are subject to PIT.

General tax treatment

Employer-paid private health insurance premiums are exempt from employee income tax and social contributions up to EUR 400 per employee per year. This threshold covers both voluntary health insurance premiums and medical subscription services combined, within the same annual cap. Amounts above the threshold are added to the employee's taxable salary in the month they are paid.

Residents

What is the tax treatment of employer-provided health benefits for employees?

Voluntary health insurance premiums and medical subscription services paid by the employer are non-taxable for the employee up to EUR 400 per person per year - neither income tax or social security contributions apply. The non-taxable amount must also fall within a monthly ceiling of 33% of the employee's base salary across all qualifying benefits in kind.

The EUR 400 limit applies to health insurance premiums and medical subscriptions combined.

Employers

Are employers in this country subject to any local tax obligations in connection with providing health benefits to employees?

Employers have no social contribution obligations on health insurance premiums paid for employees that fall within the EUR 400/year threshold - the work insurance contribution (CAM, 2.25%) is not due on the exempt portion.

On any amount above EUR 400 that is treated as taxable salary, the employer must:

include the excess in the payroll;
withhold income tax (10%) and employee social contributions (CAS 25%, CASS 10%)
pay the work insurance contribution (CAM 2.25%) on the gross taxable amount, plus the employer’s CAS contribution for unusual or special work conditions, if applicable.

Local taxes / Deductibility

Romania has no local or municipal taxes specific to employee benefits or health insurance.

Salary-related expenses - including health insurance premiums paid for employees - are fully deductible as a business expense for corporate income tax purposes, with no separate cap on the employer's corporate income tax deduction. The EUR 400 threshold applies only to the employee-side income tax treatment.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

Social security contributions are calculated and withheld by the employer from the salary paid to an employee, up to a specified cap. These contributions are also payable by the employer on top of the employee’s gross salary. The amount borne by the employer is treated as an operating cost, while the portion payable by the employee is taken from gross salary. The rates are as follows.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

In Serbia, the employer is not obliged to pay any tax. However, they are responsible for the calculation and withholding of PITon behalf of its employees when salaries are paid.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

According to the Personal Income Tax Act (Law 25/2006), health benefits such as health insurance is considered a benefit in kind in Spain. However, the amount paid as benefits in kind cannot exceed 30% of an employee's salary. Benefits in Kind must meet the following to be considered as such:

They must be used just for private purpose, not only for professional activity
They must be as a result of a current employment relationship
They cannot exceed 30% of employee's salary
They must be assessed as per Personal Income Tax Act rules.

Rate/assessment: Health benefits which cover employees or relative, are assessed as per employer cost. The first €500 a year are tax free and amount above €500 are taxable as per employee tax brace. Tax free amount can be extended to €1500/year if employee or any family member has a disability.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered to be income, benefits in kind are subject to the Personal Income Tax Act rules and subject to Personal Income Tax.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Switzerland, fringe benefits do not affect employee income, making them non-taxable regardless of the type or value.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is non-taxable, employers are not entitled to pay any local tax as part of offering health benefits to its employees in Switzerland.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

According to the Swedish Tax Agency, health care allowance is counted as a personal care benefit, which is tax-free for the employees. In order for the benefit to be counted as a tax-free personal care benefit, it must be of minor value and offered to all employees, which in practice means that the health care allowance must not exceed SEK 5,000. Excess amounts are taxed.

The wellness allowance includes most of the usual exercise and wellness activities, and the company can choose whether the wellness allowance should be lower than SEK 5,000.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is tax free, employers are not entitled to pay any local tax as part of offering health benefits to its employees in Sweden unless they exceed the allowance.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In the United Kingdom, the HM Revenue & Customs (HMRC) applies taxes to benefits in kind such as health insurance provided by a company to its employees. However, personal policies are exempt from taxation as a general rule.

Rate/assessment: The amount of tax the employee pays will be based on their income tax band – 20, 40 or 45 percent.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is considered to be income, benefits in kind are subject to income tax.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Brazil, fringe benefits are considered as part of the employees’ salary for payroll purposes. However, some fringe benefits have been considered to be tax exempt, including medical benefits (health and dental insurance) provided by the employer.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

In Brazil, employer contributions to health benefits of its employees are tax-deductible up to 20% of the employees salary.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

Chilean nationals and legal residents have access to free and subsidized public healthcare. This is managed through the government-run FONASA scheme with additional cover via privately run health insurers. However, the health benefits offered to employees by their Chilean employers are considered taxable income and employee deductions for taxes range from 4% to 35% depending on income level.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Mexico, health insurance is tax deductible for the employee and employer from source and it is a form of Social Security payroll tax.

Rate/assessment: This is assessed based on the employees’ Base Listed Salary.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Since this is taxable, it is subject to Social Security payroll tax.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Hong Kong, if the employer has sole and primary liability for payment of the benefit (health benefit), and no other person including the employee acts as a surety in respect of the liability, the employee will generally not be taxed on such benefit, except in three situations:

If the benefit is capable of being converted into money by the employee, or
If the employer pays any amount in connection with the education of a child of an employee, or
If the employer pays any amount in connection with the holiday journey of an employee.

Rate/assessment: In the first situation above, the taxable benefit is the second-hand value of the benefit obtained and in the second and third situations the taxable benefit is the cost to the employer of providing the benefit.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

The employer may or may not pay local tax, depending on what situation above occurs.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In India, the Fringe Benefit forms a part of salary as per its monetary value. The taxation of fringe benefits depends on the slab rate of the employees. Therefore, in India the Fringe Benefit Tax (FBT) has become a law and every person falling within the definition of employer will now be required to comply with the provisions relating to the FBT. It should be noted that FBT may or may not be taken out of the salary, it depends on the nature of the benefit. For example, health insurance is deducted from the gross salary.

Rate/assessment: For remuneration in the form of benefits, FBT is based on the amount of costs incurred or should be incurred by the provider.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Employers are obliged to pay FBT.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Malaysia, according to Public Ruling No. 11/2019 benefits-in-kind received by employees by their employers during employment are exempt from tax as part of gross income from employment under paragraph 13(1)(b) of the ITA. However, the above tax exemption does not apply if the employee who was given BIK by the employer has to control over his employment which refers to partnership, sole proprietor or director controlled through the holding of shares or the possession of voting power in or in relation to that of any other company, or by virtue of powers conferred by the articles of association. Thus, the BIK received by that director or employee is taken to be part of his gross income from employment and taxable under paragraph 13(1)(b) of the ITA.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

Under the Tax Code, in Philippines, fringe benefits1 are taxable at 32% fringe. As an employer, you have to withhold tax for the fringe benefits in order for it to become deductible from business income in computing income tax.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

An employer has to withhold tax for the fringe benefits in order for it to become deductible from business income in computing income tax. The following rules apply to fringe benefits.

*Please Note*

Fringe benefits to rank-and-file employees ➁ are not taxable with fringe benefit tax, but instead are taxable as compensation income subject to normal income tax rate in Section 24(A) of the NIRC, except for “de minimis benefits” and benefits provided for the convenience of the employer. Fringe benefits to managerial and supervisory employees ➂ are taxable with the 32% fringe benefit tax, which is a final tax except for “de minimis benefits” and benefits provided for the convenience of the employer.

➀ Section 33(B) of the NIRC defines Fringe Benefits as “any good, service, or other benefit furnished or granted by an employer, in cash or in-kind, in addition to basic salaries, to an individual employee such as life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.” ➁ A rank-and-file employee is an employee not holding a managerial or a supervisory position.➂ A managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.

General tax treatment

Employer-paid private health insurance premiums for full-time employees are exempt from income tax, provided the insurer is approved by the Insurance Regulatory Authority. The exemption covers the employee, their spouse, and up to four children under 21. For part-time employees, only premiums up to KES 60,000/year are exempt (the limit is cumulative with other non-cash benefits).

Residents

What is the tax treatment of employer-provided health benefits for employees?

Medical insurance paid by an employer for a full-time employee and their beneficiaries (spouse and up to four children under 21) is excluded from the employee's taxable income. The insurer must be approved by the Insurance Regulatory Authority. There is no cap on the premium amount for the exemption to apply to qualifying employees.

Part-time employees do not benefit from the exemption. For part-time employees, employer-paid health insurance is treated as a general non-cash benefit. Benefits in kind up to KES 60,000 per year are exempt under the general non-cash benefit threshold (cumulative across all non-cash benefits). Any amount above KES 60,000/year is taxable employment income, subject to PAYE at the employee's marginal rate.

Employers

Are employers in this country subject to any local tax obligations in connection with providing health benefits to employees?

Employers must operate the Pay As You Earn (PAYE) system. Where employer-paid health insurance is taxable per the rules above, the employer must include the benefit value in the employee's taxable income, apply and remit tax at the relevant progressive rate.

Social Health Insurance Fund (SHIF), National Social Security Fund (NSSF) and Affordable Housing Levy (AHL) do not apply to non-cash benefits, therefore they are not due for employer paid health insurance.

Local taxes / Deductibility

Kenya has no sub-national or county-level taxes on employment income or employer benefits. Income tax is imposed at the national level only.

Employer-paid health insurance premiums are fully deductible for corporate income tax purposes as staff costs.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Nigeria, any salary, wages, fees, allowances or other gains or profits from employment including bonuses, premiums, benefits or other perquisites allowed, given or granted to an employee are chargeable to tax under the Personal Income TaxAct. The taxable income is assessed between 7 percent to 24 percent, depending on the income band being assessed and the maximum tax rate is currently 24 percent of an individual’s income.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

In Nigeria, employers are obliged to pay tax as part when offering health benefits to those employees except for reimbursements supported with third-party invoices/receipts and reasonable relocation expenses.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In South Africa, medical contributions paid by an employer for the benefit of an employee to a registered medical scheme will result in a taxable benefit in the hands of the employee. Although regarded as a fringe benefit (and thus gross income), the amount will also be regarded as a “deemed contribution” made by the employee and will be added to the total contributions made by the employee. This would then be considered for the deduction. Amounts contributed by employers and taxed as fringe benefits are treated as contributions by the individual employee.

The deduction is limited to 27.5% of the greater of:

Remuneration for PAYE purposes, or
Taxable income (both excluding retirement funds lump sum and severance benefits).

Furthermore, the deduction is limited to a lower of R350 000 or 27.5%. Any contributions exceeding the limitations are carried forward to the next tax year and deemed to be contributed in that following year.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

Health benefits provided by employers in Australia are considered as fringe benefits and are subject to tax. According to the Australian Taxation Office, Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates. FBT is separate to income tax.

Rate/assessment: It’s calculated on the taxable value of the fringe benefit. In most cases, employers can claim an income tax deduction for the cost of providing the fringe benefit and for any fringe benefits tax they pay as a result. In Australia, from 2022-2023, the FBT is 47%.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Employers are obliged to pay FBT.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In New Zealand, non-cash benefits include any contributions from the business towards the employee’s sickness, accident or death benefit funds, superannuation schemes and insurance policies (in summary health benefit). These employees could be employees or shareholder-employees. This health benefit paid by the employer is subject to tax.

Rate/assessment: Employers can decide to pay the tax at flat rates (63.93% on attributed benefits and 49.25% on pool benefits) or calculate it for each employee and pay the tax based on their marginal tax rate.

Under the latter attribution option, the applicable FBT rate will depend on the employee's net salary (including fringe benefits). The calculation takes the fringe benefits' cash value and calculates the FBT as the notional increase in income that would have arisen.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

Employers are obliged to pay FBT.

RESIDENTS

Are the health benefits offered to them by their employers taxable? If so, at what rate?

In Israel, employees are eligible for a health insurance allowances covering the health insurance premium for employee, spouse, and children under the age of 18 for a complimentary private family health insurance (covering special surgeries, treatments etc) administered through the company appointed broker. This health insurance is seen as a taxable benefit in kind.

EMPLOYERS

With employees who work in these countries, are they obliged to pay any kind of local tax as part of offering health benefits to those employees?

There is no separate fringe benefits tax in Israel. Fringe benefits are included in the employee's gross income and are taxed as salary.

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Taxable Benefits

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