As a self-employed you often have to cover your health insurance costs fully on your own. And in the beginning it might be confusing whether and where to report your health and other precautionary insurance costs.
In short, it is not possible to deduct these costs as business expenses in your profit and loss statement but as private expenses in your income statement.
Can I deduct health and other precautionary insurance costs fully?
Basic health insurance
In principle, the tax office fully recognises contributions that are made for basic health insurance in either statutory and or private health insurance.
In both health insurance schemes, you can add optional and supplementary tariffs, such as for treatment by the chief physician, accommodation in a single room in hospitals, foreign travel insurance, or supplementary dental insurance. Such benefits are not part of the basic care, so they are not deductible without limit. However, they can be considered as part of "other insurances", see below.
Other precautionary insurances
Optional and supplementary tariffs to your health insurance can be declared up to a certain limit, if the limit has not yet been exceeded by the basic health insurance. For sole-traders and freelancers the limit is 2.800€ per year.
If the limit has not yet been exceeded, further precautionary insurances can be deducted including:
Statutory or private unemployment insurance (gesetzliche oder private Arbeitslosenversicherung)
Insurance against accidents (Unfallversicherung)
Occupational disability insurance (private Berufsunfähigkeitsversicherung)
Liability insurance, such as personal liability, motor vehicle liability, or liability of pet owners (Haftpflichtversicherung, etwa Privathaftpflicht, Kfz-Haftpflicht oder Tierhalter-Haftpflicht)
Life insurances (Risikolebensversicherungen oder kapitalbildenden Lebensversicherungen, wenn der Vertrag vor 2005 abgeschlossen wurde)
Good to know
Property insurances like household insurances (Hausratversicherung) are not considered as pension expenses by the tax office and are therefore not deductible.
In general, it is possible to report all of your insurances as the tax authorities will take a cut when you reached the limit of 2.800€. However, if your contributions to your basic health insurance already exceed 2.800€, it is no longer worth doing the work and listing the other precautionary insurances.
Let's say your paid contributions to your basic health insurance in 2019 were 3.500€ in total, than you could deduct these 3.500€ fully, but no further precautionary insurances could be claimed. If you would have made only 2.500€ contributions to your basic health insurance than you could deduct further precautionary insurances up to 300€.
Where do have to put in the information?
Every year, your health insurance company will let you know which part of your insurance is considered to be basic coverage, i.e. the amount of your insurance that you can fully deduct for tax purposes. If your private health insurance company did not provide you a breakdown you can request one.
The contributions to the health and other precautionary insurances are entered in the pension expenses appendix in the income statement.
Are there cases in which health insurance is a business expense?
If you employ staff and pay contributions to their health insurance, these costs would be part of the wage costs and therefore business expenses.
Sorted tax guides are provided without liability and do not replace a tax advisor.
To get an accurate answer for your specific case, please consult a tax advisor.
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