Finally, Pedro Sánchez’s PSOE gave in to one of the main demands of Sumar and, at the time, of Unidas Podemos since the last legislature: increase taxes on private health care. Even if he did it indirectly.
The socialists agreed with Yolanda Díaz’s party so that health insurance would no longer be exempt from Insurance premium tax (IPS). This will lead to an increase in the price of premiums for the 12.4 million Spaniards with health insurance.
Let’s recap. Today you do not have to pay VAT on insurance premiums. They are exempt because they have a specific tax, which is the aforementioned IPS, which applies a tax rate of 8%.
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Health insurance, such as life insurance or social and group insurance, is exempt from this tax. At least for now. If the measure agreed between Sumar and the PSOE comes to fruition, IPS will also start being paid for health insurance probably from 2025.
Sumar (it was the people of Yolanda Díaz who announced the agreement with the socialists) pleads for the application of the extent to which, today, the exemption of private health insurance premiums “It has a clear regressive bias, fundamentally benefiting high-income individuals and families.“.
The imposition of IPS on health insurance is one of the measures with which the Ministry of Finance, through the socialist parliamentary group, had to compromise to obtain Sumar’s support for the tax reform underway in Congress.
A tax reform which, in the absence of the General State Budget for 2025, is introduced in the form of amendments to the bill aimed at creating the minimum tax rate for multinationals.
As part of this reform, the PSOE and Sumar are in favor of the bank tax (which would be maintained), as well as an increase in personal income tax for high incomes and the creation of a figure to tax luxury goods. However, Sumar decided to definitively renounce the specific tax on energy companies that Yolanda Díaz had insisted on so much.
But despite this, It is not certain that this tax reform will continue. ERC, EH-Bildu and Podemos insist on demanding that the tax on energy companies be maintained in the coming years, and they are threatening to reverse the rest of the tax measures if they don’t.
In fact, it is still unknown What is the position of parties like the PNV and Junts regarding the increase in taxes on health insurance?. These are parties that have consistently opposed increasing taxes on private health care.
This is a controversial measure insisted on by those of Díaz (and at the time those of Pablo Iglesias). More precisely, his fetish measure is that private health services VAT is applied.
However, the proposal failed. On the one hand, activities related to private health (and education, which is also part of the package demanded by Díaz) are exempt from paying VAT not only in Spain, but practically throughout the European Union (as indicated by the Independent Authority for Fiscal Responsibility -AIReF-). These are exemptions which are in line with the spirit of community regulations.
Therefore, the removal of this tax exemption is considered an issue that should be addressed within a European framework and in discussion with the European Commissiondespite the fact that Spain (and the rest of the member states) has the power to repeal the exemptions. This is what several socialist ministers think and this is also what the tax experts that María Jesús Montero met to prepare the white paper on tax reform, in 2022, observed.
In fact, these experts advise against applying VAT to private health services, particularly because Many of these activities depend almost exclusively on this sector.“like dental care.”
Thus, taxing these services with VAT would irremediably increase their price and make their access difficult.
AIRef estimates that removing exemptions for private healthcare could generate additional public revenue up to 1.763 million euros per yearalthough it must be taken into account that these calculations predate the Covid-19 pandemic.
