Tax-free sports and health compensation for your employees

Since 1 January 2025, an employer in Estonia can cover or reimburse health promotion expenses of up to €400 per employee per calendar year without fringe benefit tax. The limit applies per employer and per employee and includes VAT. Anything above €400 is taxed as a fringe benefit. Before 2025 the limit was €100 per quarter; the total is the same, but the annual calculation gives employers and employees far more flexibility.

Yes. The exemption is calculated on an annual basis, not per quarter, so an employee can use the full €400 in January, for example for a yearly gym membership or an annual health insurance premium. Many employers still choose to set a monthly or quarterly limit in MELP to spread the budget over the year and to keep the benefit tied to ongoing employment. That is a policy choice, not a legal requirement.

The Estonian Income Tax Act lists the expenses that qualify: regular use of a sports club or exercise venue, entry fees for public sports events, massage, the upkeep of the employer's own sports facilities, and services provided by a licensed healthcare provider, including dental care, rehabilitation, physiotherapy, psychological therapy and speech therapy. Nutrition counselling by a certified nutritionist and health insurance premiums also qualify. In MELP you choose which of these categories your employees can use.

Sports clothing, footwear and equipment are not tax-free, even if they are used for exercise. The exemption also does not cover short-term rental of a sports facility, company sports days or other one-off events, because the purpose of the rule is to support regular health promotion. If an employer reimburses these anyway, the amount is taxed as a fringe benefit. MELP's AI reads each receipt line by line and compensates only the items that qualify. The employee sees the eligible amount immediately when uploading, so nothing needs explaining afterwards.

Yes, the €400 annual limit includes VAT. Input VAT on sports and health compensation cannot be deducted, because the expense is treated as a benefit for the employee rather than a business input. In practice this means a €400 gym invoice with VAT uses the full limit, and the company books the whole amount as an expense.

The part above €400 is a fringe benefit and is subject to income tax and social tax, declared monthly with the company's other payroll taxes. You can still offer a larger benefit; only the excess is taxed. In MELP you set the limit per employee, and once it is used up, further receipts are simply not compensated, so the tax-free limit is never exceeded by accident. If you deliberately set a limit above €400, your accountant declares the excess as a fringe benefit.

No. The limit is personal and tied to the calendar year. An amount an employee has not used cannot be transferred to a colleague, and it does not carry over to the next year. This is one reason many employers set a monthly or quarterly budget in MELP: it encourages regular use and avoids a large unused balance in December.

Each employer has its own €400 annual limit for the same person, as long as different expense documents are used. The same invoice cannot be reimbursed twice. The same logic applies to board members who serve on several boards: each company can apply the exemption separately.

Yes. Board members and other people working under a contract for services can receive the same tax-free sports and health compensation as employees, with the same €400 annual limit per company. For owner-managers of small companies this is one of the simplest tax-free benefits available.

It is not mandatory. Offering sports and health compensation is a choice, and the employer decides the limit, the period and the allowed categories within the law. The benefit is document-based: the employer either reimburses the employee against an invoice or receipt, or pays the service provider directly. In MELP employees can upload a receipt or order a ticket or membership in the app, and both routes count against the same limit.

Tax-free health promotion expenses are declared once a year on form INF 14, due by 1 February for the previous calendar year. The declaration shows the total amount of tax-free expenses and the number of employees who used them. Amounts above the limit are declared monthly as a fringe benefit with the company's other payroll taxes. MELP prepares the INF 14 data for you with a per-employee breakdown, so the annual filing takes minutes rather than days.

Yes. The exemption applies only when the employer makes the benefit available to all employees, and the employer must keep records showing this. You do not have to offer every category to everyone, and employees are free to decide whether they use it. In MELP you can set group-specific rules, for example different periods or categories. Check with your accountant how differentiated limits fit the available-to-all condition.