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Sweden: Tax treatment of employer-provided health insurance

Sweden: Tax treatment of health insurance

A clarification of the tax authority's position on health insurance benefits may provide additional deductions to employers for premiums paid.

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In July 2018, the rules were changed concerning tax deductions for costs related to health care, including health insurance. Previously, no deduction for the part of the health insurance premium relating to private care was allowed, and the employee was not taxed on benefits.

With the change to the rules, the portion relating to private healthcare is now also deductible for the employer (and taxable to the employee). However, the rules regarding occupational health care, rehabilitation, and preventive treatment have not been changed—meaning that part of the premium is still deductible.

Since only a certain portion of the premium was deductible before the change in the law, companies had to split the premium into a deductible and a non-deductible part. An insurance industry organization drew the attention of the Swedish tax authority to the fact that a distribution previously made with regard to the premium for health insurance has often been incorrect. As a result, in June 2019, the Swedish tax authority clarified the treatment and breakdown of standard health insurance between taxable health and health care and the tax-free components (occupational health care, rehabilitation, and preventive treatment).

From the tax authority's position, it appears that the taxable benefit of health insurance that includes both taxable and tax-free contributions can be calculated using a standard basis of 60% of the insurance premium. This percentage has been estimated to represent the average proportion of insurance companies' payments in health insurance that relate to contributions that are taxable.


KPMG observation

Accordingly, it appears that an employer providing health insurance that also includes occupational health care, rehabilitation, and preventive treatment would be able to deduct 40% of the premium (even before the law change in July 2018 and even though that part was not a taxable benefit to the employee).

Read a September 2019 report (Swedish) prepared by the KPMG member firm in Sweden

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