Sports clubs are raising their fees for group workouts after the Tax and Customs Board stepped up its battle against clubs paying stipends instead of signing contracts with coaches.
The tax board began the crackdown last year, saying the practice leaves the state without tax and coaches without social benefits.
The vast majority of the 1,800 registered sports clubs pay their staff untaxed stipends instead of salaries, saying that they can not afford to pay taxes. The tax authorities have said that the practice is borderline illegal and they want a more transparent system, and will ask clubs to pay tax until new legislation is drawn up.
Head of the Audentes Sports Club, Peeter Tishler, told ETV on Monday that they will increase prices 20 percent as of March 1, as they are crossing over to employment contracts in fear of tax authorities, who have already fined a number of clubs.
The Cabinet discussed the problem at the end of January, and found that the state should compensate the approximately 1,200 coaches who will be affected, but that would cost 3.5 million euros annually, which the state currently does not have.
Erkki Torn, board member of fitness center MyFitness, said that his club does not use the stipend system, but many other commercial sports clubs do, and that legislation should differ between commercial clubs and sports clubs that provide phyiscal education instruction for children.
Current laws say that coaches may be paid untaxed stipends, but what exactly constitutes a coach and to what extent that person can be paid without having to pay social tax, is unclear.