For almost ten years, two sectors of the Spanish economy have been fighting their particular war with the Ministry of Finance to achieve a reduction of eleven percentage points in VAT. The case of hair salons is well known, which have taken to the streets countless times and achieved two favorable votes in the Senate in just one year, but the same is the case with gyms. With less media success, they demand a tax incentive that the employers assure would help them deal with the consequences of the socialist Executive’s imminent labor reforms and recover after a pandemic from which they have not yet fully recovered.
It is not a minor problem or one that affects few, since the sports activities sector (it does not include sports shows) already represents 3.3% of national GDP and everything indicates that he has a long way to go. The report ‘The sports and fitness industry’, prepared by the OBS School business school and the University of Barcelona, collects the sensational growth data that this industry has produced in the last thirty years.
Since 1996, the number of subscribers in Spain – out of the total population – has gone from 7.1% to the current 16.5%, with a good growth forecast. Only between 2022 and 2023, for example, the membership rate increased four percentage points, and from what the data by age groups indicate, it will continue to do so in the future (for the group between 14 and 24 years old, penetration is 41% ). Thanks to all this, the sector earns 2.1 billion euros annually, provides service to 5.5 million people and employs another 250,000, according to the INE.
Rising labor costs
These results demonstrate the recovery after the Pandemic, which had a devastating effect on the union, with 53% less turnover in one year. Once the trance has been overcome, VAT now appears as the main obstacle that stands between the sector and its expansion, especially in the labor scenario that is emerging in the near future. As Adolfo Ruiz, president of the National Federation of Sports Facilities Employers (Fneid), explained to ABC, the recent increase in the SMI and the reduction of the working day to 37.5 hours per week in which the Government works will cause an increase in costs, especially in a sector in which “we cannot reduce the working day without affecting the client,” he explains.
This story began in 2012, when – through the threat of a bailout – the Government of Mariano Rajoy dared to do what no other had done since 1986 – the year the VAT was introduced – and the general rate rose three points (from 18% to 21%), reduced by two points (from 8% to 10%) and went to hairdressers, gyms, show tickets (cinema, theater, etc.), nightclubs, florists or funeral homes, among others, from the reduced to the general type; That is to say, these guilds assumed a thirteen point increase in one fell swoop.
The problem is that starting in 2014 some services were returning to lower rates, such as cultural activities, show tickets or florists – currently the latter are taxed at 4% – but not personal image services (hairdressers and similar services). ) and sports activities (mainly gyms). As has already been said, the former have achieved the support of all groups in Congress with the exception of the PSOE, which has been left alone in its efforts to keep a sector made up mostly of small self-employed workers at the high rate.
The Treasury argument
The business structure of gyms is very different, since of the nearly 4,300 locations in Spain (including public ones) a quarter belong to franchise chains. They are neither autonomous nor do they play with margins as tight as hairdressers, but they can argue the public welfare they generate as an argument in their favor to demand the reduction. This is not an unimportant reason, since VAT is a tax that users pay. In the case of gyms, the nature of an essential service is very evident, explains Ruiz, due to the savings they guarantee to the State in terms of health spending.
Whenever the Executive has opposed the reduction, it has alleged harm to revenue collection. Exactly, the Government figures the money that would not be entered into 90 million eurosor at least that was the justification given by the Treasury in 2023, when it rejected an amendment to the Budgets that the PDeCAT had proposed to reduce the VAT of sports centers.
For the president of Fneid, the Treasury’s argument languishes when taking into account the numerous reports that explain how much money the practice of sport saves the State. Deloitte estimates it at 7.2 billion annually and the Ministry of Culture and Sports itself in 5,000 million, with another 2,500 on sick leave and low productivity. Even so, the sector does not have it easy, since the State deals with increasing expenses and history shows that VAT has a hard time lowering once it has increased, and when it does, it rarely returns to square one.
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