A company agrees to reimburse gym access, dental treatment and physiotherapy. One employee uses EUR 340, another reaches EUR 470 and a third uses nothing. The accounting question is not whether the company has a EUR 1,200 pool. The exemption belongs to each employee separately, and the service, invoice, VAT treatment and declaration must all support the same conclusion.
In more than 15 years of Estonian accounting, I have seen this benefit become difficult only when HR promises it before finance defines the rules. This guide shows what qualifies, how the annual EUR 400 cap works after the 2025 change from a quarterly limit, and how to close TSD and INF 14 without confusing voluntary wellbeing costs with mandatory occupational-health expenses.
Start with the service, not the marketing label
The Income Tax Act, section 48(5⁵) and EMTA guidance on health and sports expenses define a closed set of qualifying costs. They include entry fees for public sports events; regular use of a sports or movement venue and massage; maintenance of an employer's existing sports facilities; specified healthcare services; qualified nutrition counselling; and health-insurance premiums.
A supplier calling something a wellness package does not make every line eligible. Dental care, physiotherapy, rehabilitation, psychological treatment and speech therapy must be provided within the permitted healthcare framework. Nutrition counselling needs the required professional qualification. Equipment and add-on services remain outside the exemption.
| Cost | Within the special exemption? | Control before reimbursement |
|---|---|---|
| Gym, swimming pool or regular movement venue | Yes | Service period and named employee |
| Massage | Yes | Invoice and employee-level allocation |
| Dental care or licensed physiotherapy | Yes | Provider and service qualify |
| Health-insurance premium | Yes | Policy and covered employee are identifiable |
| Sports shoes, bicycle, racket or equipment rental | No | Treat outside the EUR 400 exemption |
| Transport, parking, catering or event reception | No | Separate from the qualifying fee |
Apply the EUR 400 limit to each employee for the calendar year
The limit is EUR 400 including VAT for one employee from 1 January to 31 December. It is not prorated for a person who joins in October, and unused allowance cannot move to a colleague. If the same person has two employers, each employer has its own EUR 400 limit.
The employer must enable the benefit to all employees, including the categories treated as employees for fringe-benefit purposes, such as management-board members. This is an access rule, not a requirement that everyone choose the same service or spend the same amount. Record the policy, who was eligible and who actually received reimbursement.
The EUR 400 includes VAT and input VAT on the employee's health or sports benefit is not deductible. Post the gross invoice or reimbursement against the employee's annual balance. Choose cash-based or accrual-based tracking and use that method consistently for the year and for every employee.
Worked example: three employees, one taxable excess
Assume employee A receives EUR 240 of gym access and EUR 100 of dental care. Employee B receives EUR 250 of physiotherapy and a EUR 220 health-insurance premium. Employee C uses no benefit. The company has source documents and the services qualify.
A uses EUR 340 of the exemption. B has EUR 400 exempt and EUR 70 taxable as a fringe benefit. C's unused EUR 400 cannot cover B's excess, and A's remaining EUR 60 cannot be transferred either. The exempt total for INF 14 is EUR 740 for two employees.
| Employee | Qualifying gross cost | Tax-exempt | Taxable excess |
|---|---|---|---|
| A | EUR 340 | EUR 340 | EUR 0 |
| B | EUR 470 | EUR 400 | EUR 70 |
| C | EUR 0 | EUR 0 | EUR 0 |
| Total | EUR 810 | EUR 740 | EUR 70 |
Using the 2026 fringe-benefit rates, income tax on the EUR 70 excess is EUR 19.74 and social tax is EUR 29.61 after line-level rounding. The taxes are about EUR 49.35, so the employer's total cost of that EUR 70 excess is about EUR 119.35. Recalculate from the actual taxable amount in payroll rather than copying this example.
Connect the policy, ledger, TSD and INF 14
The EMTA calculation and declaration guidance requires the excess to be declared on TSD Annex 4 at code 4120 by the tenth day of the following month. The tax-exempt health expenses covered during the calendar year and the number of employees for whom costs were covered are reported in part III of INF 14.
Keep the policy, employee request or allocation, supplier invoice, proof of payment, qualification or licence check where relevant, annual employee ledger and declaration reconciliation together. If one invoice covers several people, document the allocation before posting it; an unallocated monthly supplier total is not enough to prove each person's limit.
Mandatory work-related health costs need a separate analysis. The EMTA guidance on occupational-health recommendations explains that a specific, enforceable occupational-health recommendation connected to the employee's work may be a business expense outside this voluntary EUR 400 benefit. A general wellbeing recommendation does not automatically produce that treatment. Keep the doctor's decision and the employer's risk assessment.
- Publish who can use the benefit and which services the employer will reimburse.
- Validate the service and provider before approval.
- Book the gross amount including VAT to the named employee's annual balance.
- Move only the excess to TSD Annex 4 code 4120.
- Reconcile the exempt annual amount and employee count before INF 14.
I keep a simple employee-by-employee ledger with four fields: service date, gross amount, document link and remaining annual allowance. That one control prevents pooled-limit errors and makes the TSD and INF 14 reconciliation a review, not a reconstruction.
The safe approach is to treat EUR 400 as an individual annual ceiling, not a company budget. Confirm the service, book the gross amount without input-VAT deduction, maintain employee-level balances and separate any excess before TSD. See also: Compliance Calendar.
If AccRes handles your payroll or bookkeeping, send the proposed health-benefit policy before reimbursements begin. We can align approvals, ledger accounts and declarations through the contact form.