Tax rules differ for employer-funded health insurance
Ukrainian tax treatment of voluntary medical coverage depends on whether the employer is a resident or non-resident. A 30% exemption is available only for qualifying payments by resident employers.
A resident employer may fund an employee’s voluntary health insurance without creating a tax liability on the portion of the premium that does not exceed 30% of the employee’s accrued salary. Any amount above that threshold is subject to personal income tax at 18% and the 5% military levy.
The State Tax Service reported the rules on Tuesday, November 3. For an employee earning UAH 30,000 a month, up to UAH 9,000 of the insurance contribution is exempt. If the premium is UAH 12,000, taxes apply to the UAH 3,000 excess.
Because a resident employer acts as the tax agent, it withholds and transfers the required charges. The employee does not need to make a separate payment or file an annual return solely because of the insurance benefit when the employer has properly settled the taxes.
No 30% exemption applies when a foreign employer pays for coverage for a Ukrainian tax resident. The full premium is taxable at the same 18% and 5% rates, and the employee must include the income in an annual tax declaration and pay the amounts due, as the non-resident is not a personal income tax agent.