Learn in what cases you can include the payment of an insurance policy in your books.
Firstly not all types of insurance are tax deductible. Beside, in some cases, it will not only depend on the insurance itself but on your personal circumstances.
Let us review some cases.
- Life insurance: in this case, the circumstances will determine whether you can include it or not:
- Life insurance including a saving plan: This type is treated in the same way as a pension plan. Therefore it produces a tax relief. People under 50 can deduct up to 10,000€ per year. For those over 50 years old the maximum is 12.500.
- Standard Life Insurance: Only self-employed persons can deduct it with a maximum of 500€ per year.
- Life insurance linked to a mortgage contract: For many years, specially after 2007, getting a life insurance with our bank was an indispensable requisite to obtain a mortgage. In this case the cost of the insurance can be included as part of the amounts used to finance your main residency which are tax deductible up to a maximum amount. You can deduct up to 15% of these amounts which normally include capital and interests paid in your mortgage with a limit of 9.040€ per year, provided that you bought your property prior to 2013.
- Home Insurance: You can only include you house insurance as a deductible expense if it is linked to the mortgage for the purchase of your main residence and this was bought before 2013. As this type is not business related it is included in the annual tax return (RENTA), not in the business books.
- Health: You can include the policy payment of a health insurance if you are a business.(self-employed or limited company) This is deductible both if you are the beneficiary of the policy or your family member. Employees can only obtain tax relief if the insurance is paid by the employer. This is also true when the beneficiaries are the close family members of the employee.
- Car: You can deduct this insurance if you are self-employed and the car is given a 100% business use. In this case you would include it in your business ledgers.