Greens want health expenditures exempted from fringe benefit tax

Aleksander Laane (Greens).
Aleksander Laane (Greens). Source: Siim Lõvi/ERR

As businesses in Estonia are obligated to pay the fringe benefit tax to the state on their employees' medical expenses, the nonparliamentary Estonian Greens have launched a petition on the platform proposing that employers should be allowed to cover their employees' health costs, including those related to dental care, tax-free.

Currently, employers are charged an additional levy of 66 percent to the state on dental care costs, and according to the Greens, this tax, which can be perceived as an unfair fine, is not beneficial for the state either. If employers wish to cover their workers' healthcare-related costs, the state should take every opportunity to encourage doing so.

"The current crisis keenly highlighted shortcomings in the healthcare system," Aleksander Laane, chairman of the Estonian Greens' extended board, told BNS.

"Health financing in Estonia is below 7 percent of GDP, while the EU average is close to 10 percent," he continued. "People's own health expenditures account for nearly a quarter of all healthcare costs — this is considered a critical limit, and if it is exceeded, access to healthcare services will deteriorate. We need to encourage those businesses that support their employees' costs on disease prevention and their medical bill payments, and we need to contribute to there being more such employers."

The Greens recommend exempting from the fringe benefit tax dental care, prescription drugs, all medical services provided in the EU, the United States and Canada as well as employees' expenditures on the provision of care for family members and relatives as well as on technical aid for persons with disabilities. The party also wants to see compensation for the use or hire of bicycles to be introduced.

The party would set the general tax-free benefit at €100 per month or €1,200 annually. Should a company and their employee reach an agreement on larger one-time compensation, the employer would be required to send a notification along with a confirmation by the employee's doctor to the Tax and Customs Board (MTA). The provision of compensation would be voluntary for employers, and payments would not be included in the employee's taxable income.

The petition is supported by the Estonian Dental Association and the Association of Private Health Establishments.


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Editor: Aili Vahtla

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