If you work for yourself in Spain and are weighing up private health insurance, the obvious question is whether the taxman pays part of it. He does: under estimación directa, health insurance premiums are a deductible business expense — for you, your spouse and your children under 25 who live with you. The cap is €500 a year per person, or €1,500 per person with a disability (article 30.2.5 of Ley 35/2006, the Spanish Income Tax Act, known as IRPF).
The conditions
| Condition | What the law says |
|---|---|
| Tax regime | Estimación directa — normal or simplified (the standard “actual income minus expenses” method) |
| Who can be insured | You, your spouse, children under 25 living with you |
| Cap | €500 a year per person; €1,500 per person with a disability |
| Who pays | You: the policy must be in your name as policyholder (tomador) |
| Evidence | The policy and the paid premium receipts — keep them in case the tax office asks |
Note that this is an expense, not a tax credit. It lowers your net business income, so what you actually save depends on your marginal rate. Anything above €500 per person is not deductible. To see how much of a policy would fall within the cap, you can price a policy for you and your family and take the figure to your gestor.
When it does not apply
- You are an employee. This rule is for business activity only. If your employer pays for your cover, a different rule applies: the premium is not taxed as a benefit in kind up to €500 per person (article 42.3.c of the same act).
- You are on módulos. The law only provides for it under estimación directa.
- Unmarried partners. The law says “spouse”; if you are a registered couple (pareja de hecho), check with your gestor whether it is accepted.
Does anything change in the Canary Islands?
IRPF is a national tax, so the rule is the same in Tenerife as in Madrid. Each region may also offer its own deductions in the regional part of the tax; if the Canaries have one for medical costs, confirm with your adviser that it applies to you before counting on it.
Choosing the policy
The deduction doesn’t change which policy is right for you — it just makes it cheaper. What to look at:
- Co-payments or not. A copago is a fee you pay per visit. See a doctor often? A full policy without co-payments keeps costs fixed. Rarely go? One with co-payments costs less. More in co-pay or no co-pay.
- Hospital cover. Outpatient-only plans leave it out; full plans include it.
- Waiting periods (carencias) — the time after you sign up when some treatments are not yet covered.
- The whole family on one policy. Each insured person has their own €500 cap, so covering the family together adds up. See family health insurance in Tenerife and how to choose health insurance in Spain.
The premium depends on age, number of people and the type of plan — we explain the factors in how much health insurance costs in Spain. If comparing wording policy by policy isn’t how you want to spend an afternoon, you can get a health insurance quote for your business free of charge.
Tip: make sure the policy is in your name and the premium leaves your own bank account. A policy paid by someone else is the easiest way to lose the deduction.
Still applying for residency?
If you are moving to Spain and applying for residency as a self-employed person, you need a different kind of policy: no co-payments, no waiting periods and a certificate. We cover that in insurance for a residency visa and digital nomad visa insurance. The final document list is set by each immigration office (Oficina de Extranjería).
Covering your staff
If you employ people, group health policies for staff exist: one contract, with terms depending on headcount. For the employee, the premium you pay is tax-free within the limit above.
This article is not a substitute for advice from a tax adviser: how the rule applies depends on your situation.
Want to know what a policy for you or your family would cost? Ask for a free quote in the chat.