Before 2020, the entry of expenses with insurance on E-Fatura it was not automatic, which raised many questions for taxpayers when validating invoices. The situation has since been corrected, but not all insurance expenses that now appear on the portal can be deducted.
The truth is that not all insurance counts for IRS purposes and that for certain types of insurance, such as Life Insurance, there are strict rules about who can deduct this expense. Still, that doesn’t mean you can’t enjoy any discount or tax benefit with your insurance. Later on, we show you which ones give you the right to deduct.
Insurance on E-Fatura: what has changed
As the name implies, what we validate in E-Fatura are invoices. Other expenses that do not generate invoices, but receipts, enter the system in another way. This is what happens, for example, with mortgage interest, house rent, user fees, tuition fees and charges for homes that are public entities.
All these expenses can be deducted from IRS collection but are communicated to the Tax Authority (AT) by entities that are not obliged to issue invoices.
These entities must, however, present a declaration, during the month of January of each year, so that the AT can make the accounts of all deductions from the collection referring to the taxpayer in question.
From March 15thtaxpayers can then consult these and other expenses for tax deductions on their personal page on the Finance Portal (and not on the E-Fatura).
This was also the procedure for insurance, but since January 1, 2020, the exemption from issuing an invoice by entities that carry out exclusively VAT-exempt operations, including insurance companies, ceased to exist (Decree-Law No. 28/2019of February 15.)
Since then, insurance intermediaries are obliged to issue these documents and communicate the amounts by the 12th of the following month, as with the other invoices that enter the E-Fatura.
What insurance can be deducted from the IRS?
Having clarified the first point, let’s see what insurance can be deducted from the IRS collection, to recover some of the money you spent on these expenses throughout the year.
These amounts are communicated to AT by the insurers and appear pre-filled by default in Annex H (Tax Benefits) of the IRS declaration.
As with other health expenses, you can deduct 15% of the Health Insurance premiumprovided that it only covers the health risk.
Keep in mind, however, that the limit for health expense deductions that can be considered is 1000 euros. Which means you can’t deduct more than that amount, regardless of the expense you made.
The Insurance Company where you took out your Health Insurance, at the beginning of the following year, will send you a statement stating the expenses incurred with these premiums. It is this declaration that tells you the amount that you will have to include in Annex H of your IRS or check if it is already duly pre-filled.
Contrary to what happened in the past, it is currently not possible to use Life Insurance to be entitled to a collection deduction. However, there are three exceptions to this rule.
Contributors with fast-wearing professions
The first concerns taxpayers with fast-wearing professions, such as sportsmen, miners and fishermen (Art. 27 of the IRS Code).
These professionals can deduct 100% of premiums paid in Life Insurance at the IRSwith a limit of 2,216 euros per taxable person (corresponding to 5 x IAS, which, in 2022, amounted to 443.20 euros).
However, there are some conditions to be respected. In order to be entitled to the deduction, Life Insurance must guarantee exclusively the risks of death, disability or old-age retirement. In the case of retirement due to old age, Life Insurance must guarantee the benefit after the age of 55.
In addition, Life Insurance cannot guarantee, in any case, the payment of any outstanding capital and this must not happen, namely, by redemption or advance payment, during the first 5 years.
The second exceptional case is that of taxpayers with disabilities. According to Art. 87 of the IRS Codea taxable person with a disability can deduct on their IRS 25% of paid Life Insurance premiums with death or disability coverage. However, this deduction cannot exceed 15% of the total collection amount.
If they are intended for old-age retirement, such as PPR, 25% of premiums paid for life insurance can also be deducted from the IRS. The limit for this deduction, however, is 65 euros for unmarried subjects or legally separated and 130 euros for married subjects and not legally separated.
Insurance that contributes to the reform
The third exception to the rule is insurance made on account of old-age retirement.
According to Article 21 of the Tax Benefits Statutemay be deducted from the IRS 20% of premiums paid for Life Insurance designed for retirement, such as Retirement Savings Plans (PPR). There is, however, a maximum limit for this deduction that varies depending on the age of the taxpayer, as shown in the following table:
The entity in charge of managing the PPR informs the AT of the amounts invested in the previous year, so these already appear pre-filled by default in Annex H – Tax Benefits.
If you want to enjoy this benefit, just confirm that the values are correct. If you do not wish to do so, in order to be able to redeem the PPR at any time, simply eliminate this deduction.
personal accident insurance
With regard to personal accident insurance, only individuals with fast-wearing professions can deduct these premiums from your IRS. Thus, we can deduce 100% of premiums paiduntil the deductible limit of 2,216 euros (the equivalent of 5 times the IAS in 2022).
In renting, it is mandatory to have at least one insurance against fire. Therefore, and only if you are a landlord, receipts for this insurance can also be deducted from the IRS. You should include them not in Annex H, but in Annex Fwhere property income is declared.
If you want to take out other optional insurance, such as multi-risk home insurance in addition to the mandatory insurance, these will no longer be deductible.
In the case of auto insurance there is no associated tax benefit. Even so, this expense can be deducted as “General Family Expenses”.
You can check this expense right now in your E-Fatura. These amounts are communicated to AT by the insurer and then appear automatically filled in in Appendix H of your IRS declaration.
Article originally published in July 2019. Last updated in January 2023.