Private medical insurance offered by the employer

The High Administrative Court has passed a resolution concerning taxation of medical insurance bought by employers for their staff as a benefit in kind. The issue has always been controversial. However, the most common approach was that if the actual individual value of the benefit in kind is not possible to determine, no taxable income arises for the employee.

In the recent binding resolution the Court stated that medical insurance covered by the employer always generates taxable income for the employee. The income should be determined based on the cost of insurance – the total price of insurance package purchased by the employer should be divided by the number of employees entitled to it.
What if due to the way insurance package is structured the employer is not able to determine the individual cost of insurance? And is such calculation of the value of a benefit in kind at all admissible, as the judges objecting to the ruling argue?

It is important to remember, that if the tax authorities claim there is an income, they must determine its actual amount based on gathered evidence. The income cannot be determined as an average or based on assumptions. Thus practice of the tax authorities will show how the Court resolution will be implemented.

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