The tax relief of health insurance in Spain
We closed 2015, the tax reform, and we are already preparing for the changes that 2016 will bring. Of course, they have nothing to do with this year’s, but in some cases there are significant developments.
Among others, the compensation of capital gains is improved, the tax rates are slightly reduced but the taxation for some self-employed who are listed by the module regime and for those who had a civil society were also worsened. But also, we can find a change in the taxation of one of the most important insurance, health insurance.
The income obtained was taxed to do so for disposable income
Since 1998 , when the personal and family minimum that we now apply in the income statement was created, the general deduction for medical expenses disappeared. The law that enshrined the fiscal change that year, 40/1998 , defined a change of concept. The income obtained was taxed to do so for disposable income, that is, an amount was deducted from income to cover basic needs.
With this, the personal and family minimum eliminated the possibility of deduction of many expenses, beyond health insurance and established amounts to be deducted that are modified by personal circumstances (for example, by the number of dependent children). This may change next year. Before the end of the legislature, prior to the start of the general election campaign, the Senate approved an amendment to the 2016 Budgets in which the deduction was generalized with an annual limit of 500 euros that rises to 1,500 for members of the family with disabilities, including in this deduction the premiums of spouse and children under 25 years.
The limited current deduction of health insurance
Until we see if this deduction goes ahead, what is real are the current deductions. For the moment, in general, the self-employed, if they are entitled, for them and their direct family (spouse and children). This is subtracted, like other expenses, from the income it generates and with a maximum of 500 euros per year. But in addition to this case, some autonomous communities also keep them in the IRPF regional section.
Balearic Islands apply this deduction, of up to 15% of the expenses paid in individual health insurance premiums, for residents of this autonomous community who meet any of these points: That they are a member of a large family, over 65 years of age, or suffer a disability equal to or greater than 65%. In addition to this there are economic limits. In order to benefit from work income – whether self-employed or self-employed – they cannot exceed 12,000 euros in individual taxation, rising to 24,000 in the case of large families. In joint taxation the limit is raised to 25,000 and 36,000 if the family is large.
In Aragon , in which its elimination was debated in October, you can currently deduct up to 10% of the health insurance expenses for the taxpayer, spouse and children with a somewhat better income limit than in the Balearic Islands: 30,000 euros in individual declaration and 50,000 in the joint.
Non-compulsory medical insurance
Cantabria also allows the deduction of 5% of the amount paid in non-compulsory medical insurance, for the taxpayer and his direct family. This deduction is limited annually to 200 euros in individual taxation and 300 euros in joint taxation. It can be increased by 100 euros in individual and collective taxation when the taxpayer is a person with disabilities and proves a disability of at least 65%.
This is the situation, which, as we have commented, is subject to possible changes in 2016, both in generalization of the deduction in its state section, and in regional modifications. Hopefully they will adapt to the reality of the growing relevance of health insurance for millions of families.