Our taxation articles repeatedly reference the three-way split of the Tax Authority’s guidance of 14 May 2020. This article makes the split tangible: eight typical situations and where they land – because the category decides whether the burden is 33.04% or nearly 70%.
The three categories in a sentence each
- Individual insurance: taxed by legal relationship – as salary in employment.
- Group savings-type: likewise by relationship, because the per-person savings premium can be determined.
- Group risk: specific defined benefit (33.04%), because the per-person premium cannot be clearly determined.
Eight situations – which category?
- The company covers all employees for outpatient care, banded pricing → group risk. ✓
- The company signs a „framework", but every employee decides individually and picks a package → collective umbrella = individual. ✗
- An executive tier tied to roles, with objective criteria → group risk. ✓
- The company takes over the premium of an employee’s existing individual policy → individual. ✗
- A group contract with a savings element and individually tracked account values → the savings part is savings-type = by relationship. ✗ (the risk part may stay favourable)
- Group life and accident cover for the whole team → group risk. ✓
- A family member’s premium reimbursed by the employee → the employee’s private expense, not an employer-benefit question. –
- A 2-person company, both employed, identical cover → group risk, if structured properly (2-person article). ✓
The lesson
Substance, not labels, decides the category – the most common reclassification cause is hidden individual choice (collective umbrella). If any of the eight feels familiar and uncertain, audit the contract structure – before requesting proposals, not during a tax inspection.
Informational content, not tax advice; the referenced guidance and ministry positions also appear in the insurers’ publications.
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