The nautical sector in the Balearics – Miguel Ángel Serra

The nautical sector in the Balearics – Miguel Ángel Serra

A recent study of the nautical sector’s economic impact, presented by the
Complutense University of Madrid on March 8 at the 6th Nautical Congress
of the National Association of Nautical Companies (ANEN), determined that
its macroeconomic impact on our islands was in the region of some 3,000
jobs, with operating revenues of 408 million and a gross added value of 171
million euro, which goes to show that, together with the hospitality sector, it
constitutes one of the drivers of the Balearic economy.At a national level,
these same magnitudes translate into 82,000 jobs, operating income of 12
billion and a gross added value of 4.8 billion Euros, with the Balearic Islands
coming second in the national ranking,very close to Catalonia, in first place.
The main characteristics of the nautical sector are the preeminence of microcompanies in the productive field (90.6% of companies have between 1 and
9 workers), a process of constant renovation (38.1% of companies were set
up in the last 10 years) and high multiplier coefficients, which show the effect
that the activity of the nautical sector, both indirectly and as a knock-on effect
generates in the economy. The latter factor is especially relevant given that,
for every euro of added value generated in the sector, 5 euro are generated in
the total economy and, for every job created in the nautical sector, 4.2 jobs
are created in other economic sectors.

In relation to employment, that created by the nautical sector is high quality
employment and with remuneration which is much higher than the average
for other sectors. Possibly due to its powerful growth in recent years, another
characteristic of the sector is the great difficulty companies have when it
comes to finding skilled workers, who on many occasions have to be hired
from abroad. In this regard it is important to highlight that on March 2 the
Council of Ministers passed two royal decrees establishing and regulating the
content of the new intermediate level vocational training courses for the repair and maintenance of recreational vessels, which will, without a doubt, help to improve workers’ skills over the coming years and,consequently,
move towards a greater professionalization of the sector.ANEN has participated actively, being closely involved in the working groups that were set up to
define course content and characteristics.
The economic activities that make up the nautical sector are varied and
include sub-sectors such as construction, boat repair and maintenance,
boat rental (charter), electrical and electronic equipment, marinas, distribution and retail trade of nautical products, training, etc. Each of these
subsectors generates a domino effect or drag effect on the rest of the
sub-sectors and on the economy in general, so that growth in any one of
them positively affects the rest and this, in turn, ends up positively impacting household income for those who are either directly employed in the
sector itself or indirectly in other linked sectors by what is known in economics as a “knock-on effect”.
To cite just one of the sub-sectors, the turnover from chartering large yachts
in the Balearic Islands increased by 39% in the 2017 season compared with
the previous year, which not only means increased turnover for other sub-sectors, but also in the amount of revenue raised by the Treasury which, just in
terms of VAT, was 41% more than in the previous year, reaching a figure of
10 million euro. It is also true that this high increase in activity is sometimes
misleading because we start from low figures in absolute terms if we compare ourselves with other neighboring countries and direct competitors in the
Mediterranean such as France or Italy.And we have to note that in Spain,
until the summer season of 2014, boats over 15 meters in length could not
be chartered without prepaying the “special tax on certain means of transport” (IEDMT) -better known as matriculation tax-, which meant paying 12%
of the boat’s value, and which in practice, meant this niche market was nonexistent. It wasn’t until October 2013 when a legislative amendment was
made to the Excise Duty Act 38/1992, of 28 December (LIE), which eliminated
the 15-meter limit,so that those boats dedicated exclusively to the commercial activity of chartering in Spain were able to request an IEDMT exemption
from the tax authorities.As a result of this legislative amendment, which was
supported by both ANEN,AEGY (The Spanish Association of Large Yachts) and
AENIB (ANEN’s partner in the Balearic Islands), turnover in this particular market has multiplied 11-fold in four years.
The above is only one example of the enormous importance that regulatory
changes can have on real activity, being very beneficial for both the private
sector and the Treasury, in what the Anglo-Saxons call a “win-win scenario”.
This is what the nautical sector is demanding of the authorities, to be put on
an equal footing with our European neighbors, especially in the tax field. One
of these demands is the complete scrapping of IEDMT on recreational craft,
irrespective of their length and whether they are for private or commercial
use. IEDMT is a tax that does not exist in any of the neighboring countries,
and which implies, for those wishing to acquire a boat over 8 meters in length
for private use, paying 33% of its value in the tax (21% VAT plus 12%
IEDMT), which is by far the highest tax burden in Europe. The tax authorities
know that repealing IEDMT would boost the recreational nautical sector and
would result in higher revenue in terms of other taxes such as VAT, fuel duty,
and personal income tax on salaries earned, etc. The “Lagares report” of
March 23, 2014 on the reform of the tax system supported this, and the main
political parties in our country have stated on many occasions since 2010 that
they are in favor of its elimination, however, as Diogenes “The Cynic” said,
motion is proved by walking.
Let us hope that political decisions and subsequent regulatory change will
happen as soon as possible, as it will not only be positive for the economy in
general, but also for both the nautical sector and the Treasury in particular.

Reference: DIARIO DE MALLORCA
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