Although 2025 started with a number of tax increases, there were also some positives – the Income Tax Act saw a number of innovations to promote tax-free health. The changes that came into force from this year offer both employees and employers greater flexibility to provide support and simplify the administration of benefits. We highlight the major changes.
Massages will be added to the list of tax-free benefits
From 1 January 2025, it will now be possible for employees to benefit from tax-free massages, among several other categories. Whereas previously only massage services provided by a physiotherapist with a professional certificate were tax-free, from now on the tax exemption is extended to all massage services.
The addition of massages to the list of exempted health promotion activities is a long-awaited change that was expected by employers and employees whose daily work involves working in a forced posture and whose health problems could be alleviated or prevented by an appropriate massage procedure.
Flexibility to provide the benefit at once
Notwithstanding the retention of the tax-free threshold of €400 per year, the health and sport allowance can now be used in a more flexible way and on a larger scale at a time. Instead of the previous limit of €100 per quarter, it is now possible for an employer to offer an employee €400 per year in one go.
The change will help employees to better plan their health expenditure and, if necessary, make larger one-off payments for services and events they need. For example, to pay annual fees for sports clubs, which often come to an amount lower than monthly payments, to reimburse seasonal admissions or to pay competition fees for major sporting events – all of which are costs that can amount to several hundred euros and which were previously not covered by the tax exemption all at once.
The bonus for the employer is better planning of the one-off cost and the possibility to set it as a one-off for the whole year if desired.
Specified list of health services and the difference between a license and a personal professional certificate
The amendment extends the exemption further to a number of services provided by a person with a health service licence. This is the case, for example, in the context of dental treatment, rehabilitation, psychological treatment, physiotherapy or speech therapy. The service of nutritional counselling, provided by a qualified nutritional counsellor, will also be added. Although there are still few qualified nutrition counsellors in Estonia, this is a positive innovation to improve access to the service.
Personal professional certificate or operating licence?
Previously, the exemption was linked to a specific professional, i.e. a person registered in the Health Information System or holding a professional certificate. The focus is now on the licence to practise. This means that services provided by a person with a health care licence in the context of the corresponding treatment will become exempt.
Several ways for managing tax-exemption
One way to offer tax-free health promotion to employees is to reimburse expenses through manual accounting using a receipt system. In this case, the accountant must know which services and providers are covered by the tax-exempt Health Promotion Act and manually manage the invoices.
Another and more efficient option is to use the corresponding Stebby environment, where a welfare benefit can be managed by a company of any size. The platform provides a single reporting and easy administration for the employer, and with a wide range of tax-free services, it’s easy for employees to find something new and appealing. The whole environment is compliant with the new regulations and already offers thousands of tax exempt services.
