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Tax incentive for health and sports expenses

Expenses made for improving the employee’s health will not be taxed as a fringe benefit in the extent of 100 euros per employee per quarter if the employer has made this option available to all employees.

An employee means:

  • a person working under an employment contract
  • an official
  • a member of a management or controlling body
  • a sole proprietor who sells goods to an employer for longer than six months
  • any natural person working or providing services under a contract for services, an authorization contract or other contract under the law of obligations

The tax incentive does not apply to any health and sports expenses of the employee’s spouse, partner or direct or close relative, or any health and sports expenses of an employee of the same group as the employer or of another company.

Health and sports expenses

Tax exempt health promotion expenses include:

  1. participation fee in public sports events
  2. expenses directly related to regular use of sporting or mobility venues
  3. expenses made for maintenance of the employer’s existing sports facilities
  4. expenses made for the services of a rehabilitation therapist, physiotherapist, occupational therapist, clinical speech therapist or clinical psychologist entered in the state register of health care professionals or holding a corresponding professional certificate
  5. health insurance premiums of a sickness insurance contract

An employer can compensate up to 100 euros per employee per quarter for health and sports expenses exempt from tax.

It should be borne in mind that:

  • the amount of 100 euros includes VAT and input value added tax cannot be deducted on health and sports expenses incurred by the employee
  • 100 euros may be used within one day, one month or three months. The important thing is that the total sum of the tax exempt expenses for one quarter is up to 100 euros.
  • 100 euros are per each employee per quarter and cannot be transferred to other employees or to subsequent months or quarters, or to sum up of tax exempt costs for the whole year is not allowed
  • if an employee has several employers, each employer may apply a tax incentive in the amount of 100 euros for health and sports expenses
  • an expense document is required to compensate the cost (exempt from taxes)
  • it is necessary to keep person-based accounting (it is possible to select between cash-based or accrual accounting)
  • there is no obligation to compensate the sports and health expenses, it is an opportunity to an employer
  • the employee receives the benefit due to their employment relationship (contract will be signed in the future, is suspended, valid or terminated)
  • the tax incentive does not cover equipment (clothing, footwear, a table tennis racket, skis, including rental of sports equipment and facilities, and so on) or extra services (for example, catering, transport, parking, luggage storage, banquet after the event and so on) necessary for the activity
  • the tax incentive also extends to health and sports expenses incurred outside of Estonia

The employer can decide whether and what health promotion services or sporting options to offer to its employees. It is up to the employee to decide whether and which health promotion services or sporting options he or she uses.

  • An employer has 10 employees, but only two of them have wished to take advantage of the health promotion. Thus, the employer can cover health promotion expenses exempt from tax for two employees or 200 euros per quarter.

  • An employer has concluded a contract for the use of a sports club in the amount of 500 euros per month (that is 1500 euros per quarter). The employer has 20 employees. If 10 of them have wished to take advantage of the sporting option, the tax exempt cost of using the sports club would be 1000 euros (10 × 100) and the employer would have to tax the 500 euros (1500 – 500) for the use of the sports club as a fringe benefit with income and social tax. If all 20 employees have wished to take advantage of the sporting option, the tax exempt cost of using the sports club is 2000 euros (20 × 100), and since the employer pays 1500 euros per quarter, no tax liability shall arise.

The employer may set different ceilings for the reimbursement for employees if the reimbursement is guaranteed to all employees. However, the introduction of a ceiling cannot lead to a situation where some employees have no opportunity, in principle, to compensate the expenses, for example: the ceiling is 100 euros per quarter for members of the board and 10 euros per quarter for employees. In such a case, the benefits have not been offered to all employees similarly.

The tax incentive is not intended for employees working under a short-term (for example, one-day) authorization contract (such as freelance journalists, educational staff, members of thesis defence committees, reviewers, experts, registered unemployed persons who undertake workbits, and so on). While the Income Tax Act allows tax exempt health promotion expenses on these people, not offering them the benefit is not considered a violation of the condition, requiring a discount for all employees.

Participation fee for a public sporting event

Participation fees related to public sporting events which can be attended by anyone (subject to understandable restrictions set by the organizer, for example, number of participants, obligation to pay a participation fee, and so on) are not taxed as fringe benefits, regardless of the employer. Public sporting events are various public events and individual events.

Public sporting events are not, for example, in-house sports days or similar events aimed at a more targeted audience, which usually requires working for the employer or other legal obligation. Public sports events also include events meant to be held to support sports activities (exercises, competitions) between employees of the enterprise. For example, sports competitions organised for employees of separate enterprises in the area of information and communication technology, tournaments between companies (for example basketball, volleyball). Characteristic features determing public sports event are: public notification, event agenda, rules, comparison of results (scores) of participants (companies and/or natural persons), praising the best.

  • Public sporting events include Narva Energy Run, Night Run Estonia, Tallinn Marathon, SEB May Run, Lake Viljandi Run, Tartu City Run, LHV Health Run and Walk, Saaremaa Three Days Running, Tammsaare Folk Hike, Ekström’s March in Lahemaa and others.
  • An employer purchases its employees an adventure trip from a service provider (not a public event). The employer’s employees can take part in the trip purchased by the employer. The costs of the expedition or hike are not considered tax exempt health promotion costs.

Costs directly related to the regular use of sports or fitness facilities

Sports and fitness facilities are public and in-house sports clubs, the cost of which is settled on behalf of the employee or reimbursed on the basis of an expense document.

Sports and fitness facilities include, for example:

  • stadiums, sports-specific fields and halls
  • gyms, artificial fields, halls, health trails, cycle paths
  • green areas, parks, streets, sports ground

As the primary purpose of the tax incentive is to support the regular health promotion of employees, the tax exemption does not extend to situations where the employer wishes to rent a sports complex or training facility for a short period of time, for example, for corporate sports days.

An in-house sports club is also, for example, a non-profit organization founded by employees, which has a membership fee to cover the sports expenses of its members.


Health promotion expenses include regular participation in folk dance and ballroom dance classes, yoga classes, adult ballet and belly dance classes, swimming lessons, aerobics, gym (including sports club membership fees), table tennis training, hot yoga, and so on. Also, the costs of mobile apps and training videos offering various sports/training programs in the gym, on the health trails, at home, and so on.

Meditation and mindfulness, beauty salon services/treatments (for example, LPG, roller massage) and agility are not considered as expenses related to the place of sports or exercise.

Purchasing water park, spa, or sauna centre services without regular sports/training activities is not eligible for the tax incentive.

Costs incurred in the maintenance of existing sports facilities by the employer

The tax incentive extends to expenses incurred by the employer in the maintenance of existing sports facilities (excluding investments). The employer can maintain existing facilities within the tax exemption limit. The ceiling is also set to 100 euros per quarter per employee and can be used for workers who use the sports facilities of the employer.


Sports facilities include stadiums and sports fields, skating rinks, outdoor swimming pools, motorways, motorbike and bicycle tracks, racetracks, golf courses, beach facilities, springboard, roller way. Buildings and parts thereof which are not sports facilities (for example, gyms) are also covered with the tax exemption.

Expenditure on the maintenance of sports facilities includes, for example, costs directly related to the maintenance of the premises, which may include the repair, cleaning and running costs of facilities and equipment used for health promotion, such as electricity and water.

Please note that the price of a fringe benefit is not the market price for the use of a comparable gym, but the actual cost of maintaining it.


An employer has set up a gym on its premises for its employees, which is regularly used by 10 employees. The cost of maintaining and cleaning the premises and equipment is 200 euros per month, and in addition, 150 euros for water and electricity, a total of 350 euros per month (or 1050 euros per quarter). As the tax exempt quarterly limit for 10 employees is 10 × 100 = 1000 euros, the excess, 50 euros, is taxed.

When an employer sets up a gym in the office and purchases new equipment for the gym, these expenses are related to business and these are tax-free expenses.

Expenditure on services of a rehabilitation physician, physiotherapist, activity therapist, clinical speech therapist or clinical psychologist

In order to qualify for the tax incentive, the service provider must be a rehabilitation physician, physiotherapist, activity therapist, clinical speech therapist or clinical psychologist registered in the National Register of Health Care Professionals, who provides their professional services.

The tax incentive does not apply if the service provider holds another professional certificate (for example, a massage therapist, lymph therapist, masseur, chiropractor, and so on).

For example, employees may require the services of a rehabilitation physician to prevent injuries, to recover to the fullest extent possible from a trauma, acute illness, injury, or long-term disability, or to maintain functionality. Employees may also need the services of a physiotherapist, activity therapist, clinical speech therapist or clinical psychologist to address health concerns. Specialist services from these professionals are eligible for tax incentive.

Healthcare professionals are registered in the National Register of Health Care Professionals.

The issued professional certificates are registered in the register of professions.

For a physiotherapist, the qualification is attested by a professional certificate of physiotherapist and/or physiotherapist’s diploma.
List of physiotherapists

For activity therapists, the qualification is attested by a diploma of professional higher education or by a diploma accompanied by a professional certificate.


The rehabilitation physician (who has a professional certificate of psychologist) has assessed the patient's health and, depending on the problem, prescribed different services for further recovery.

Health insurance premiums

In agreement with the employees, the employer may conclude health insurance contracts with insurance companies to cover any medical expenses that may be incurred, or reimburse the employees exempt from tax on the basis of expense documents within the limit of the tax incentive.

Voluntary health insurance is necessary especially for those who, for some reason, are not covered by the Estonian Health Insurance Fund or cannot/do not wish to purchase coverage separately from the Estonian Health Insurance Fund.

Private health insurance is mainly intended for those who:

  • do not consider the services of the Estonian Health Insurance Fund sufficient
  • wish to use private health care institutions and
  • go abroad for treatment, if necessary

An employer concludes a health insurance contract offered by the Estonian Health Insurance Fund for a person who is not covered by state health insurance (for example, the service is provided under a contract under the law of obligations and the monthly fee is lower than the minimum monthly rate of social tax liability).

Calculation of the tax incentive

If the period when the expense (benefit) is received differs from the period when it is paid for, the employer must select a method of accounting: whether it is based on quarterly costs (activity) or the payout. The employer has to use the method chosen consistently throughout the year and for all employees.

  • In the first quarter, an employer pays the premium in one instalment before the beginning of the one-year insurance period (prepayment), in the amount of 400 euros per employee per year. The accrual method of accounting is chosen which allows for the prepayment to be divided into quarterly expenses. If the limit is exceeded in one quarter, the amount in excess of the limit shall be declared for the quarter in which it was exceeded.
  • In the first quarter, an employer pays an advance payment of 400 euros per employee to a sports club. The cash-based accounting method is chosen. The amount above the limit of 300 euros (400 – 100) is taxable.
  • An employee submitted an invoice to his or her employer at the end of December 2018 in the amount of 400 euros, indicating the period of January to December 2018. The employee used the sports service only in the fourth quarter, in the amount of 400 euros. The employer may reimburse the employee 100 euros exempt from tax, while the remaining 300 euros are taxed as fringe benefits.


Amounts in excess of the tax exempt limit shall be declared on form TSD, Annex 4, code 4120, to be submitted by the tenth day of each subsequent month. The tax liability of the fringe benefit is payable as normally, on the basis of the form TSD.

Part III of form INF 14 is used to declare total tax exempt health promotion costs borne or reimbursed during the calendar year within the limit (subsection 48 (55) of the Income Tax Act) and the number of employees to whom these expenses were covered or reimbursed during the calendar year.

On 1 February 2019, the first declaration on the tax exempt health promotion costs covered or reimbursed in 2018 was submitted. The declaration form can be completed for the year. The data are declared in the fourth quarter declaration.


A private limited company has paid for health promotion expenses within the tax exempt limit for 3 persons (Jüri, Mari, Karl) in the first quarter, 4 persons (Jüri, Mari, Karl, Siim) in the second quarter, 5 persons (Jüri, Mari, Karl, Siim, Kärt) in the third quarter and 2 persons (Jüri, Mari) in the fourth quarter. The fourth quarter form INF 14 declares the number of employees as 5 (Jüri, Mari, Karl, Siim, Kärt) because their expenses have been tax exempt during the year.

Form INF 14 does not show the compulsory costs under subsection 13 (1) of the Occupational Health and Safety Act since these costs are business related and are not declared.

Tax liability

The price of the fringe benefit is calculated on the part exceeding the limit.


An employer has concluded a contract for the use of a sports club for 500 euros per month (1500 euros per quarter). 10 employees are using this opportunity. The tax exempt quarterly limit for 10 employees is 10 × 100 = 1000 euros. The amount taxable with both income and social tax is 1500 – 1000 = 500 euros.