Can I deduct private health insurance as a self-employed autónomo in Spain, and what are the requirements and limits?

Self-employed workers in Spain (autónomos) can deduct their health insurance premium for IRPF (Spanish personal income tax) purposes as an expense of their business activity. The deduction has specific requirements, set out in article 30.2.5 of Law 35/2006 on IRPF, and it is advisable to meet all of them to avoid problems if the Spanish Tax Agency (Hacienda) carries out a review.

Requirements to deduct health insurance as an autónomo

• Estimación directa regime. Business profits must be calculated under estimación directa (direct assessment, standard or simplified). If the autónomo is taxed under módulos (estimación objetiva, a flat-rate scheme), the premium is not deductible.
• People covered. The part of the premium covering the self-employed person, their spouse and their children under 25 living with them is deductible.
• Annual limit. The maximum deductible amount is €500 per year for each insured person, or €1,500 if the person has a disability. Anything above that amount is not deductible.
• Policyholder and payment. The policy must be in the autónomo's name as policyholder and the premium must be paid by them.
• Type of insurance. It must be a sickness or healthcare insurance policy. Policies that only pay a daily allowance or compensation for sick leave are not covered by this deduction.

Documents worth keeping

Keep the receipt or the annual certificate from the insurer showing the breakdown of the premium per insured person. This proves that the €500-per-person limit has been applied correctly and that only the share relating to people allowed by law has been deducted.

How it is applied: business income and Modelo 130

The premium is treated as an expense within business income, not as a tax credit. That means that, as well as in the annual income tax return, it can be included in the quarterly payments on account of Modelo 130 (quarterly income tax prepayment for the self-employed), reducing the amount paid in advance to Hacienda during the year.

What about VAT on health insurance?

Insurance premiums are exempt from IVA (Spanish VAT). The receipt carries no VAT, so there is no input VAT to recover in the quarterly returns.

Worked example

A self-employed woman under simplified estimación directa has a health insurance policy covering herself, her spouse and their 15-year-old son who lives with them. She could deduct up to €1,500 a year (€500 per insured person). If the total premium were higher, the excess would not be deductible. If she were taxed under módulos instead of estimación directa, she could not deduct anything for this item.

Our advice

Before recording the expense in your accounts, check that the policy is in your name, that the insurer's certificate breaks down the premium per insured person and that everyone covered meets the requirements. A professional review of your self-employed accounts helps you benefit from this expense without risk.