Written by Cécile Remeur,
A relatively recent phenomenon, the collaborative economy has become mainstream in a decade in some areas of activities, such as car-sharing or short-term lets. Although it is now a well-known term – with alternative names from the ‘sharing’ to ‘gig’ to ‘peer‑to‑peer’ economy – it remains difficult to grasp precisely, beyond the central feature that potential consumers and providers are connected via a digital platform that matches demand and supply, providing cheap access to information on a very large scale. These ‘match-makers’ make it possible for non-professional providers to offer goods and services in a wide range of activities, generating value and with the potential for further development.
The collaborative economy is a fast-evolving phenomenon, which spans existing situations. However, the names specifically used to describe it blur lines through the use of a new trinity: ‘users-providers-platforms’ that does not match with traditional consumer, business and intermediary concepts – on which legal provisions are based and used for the application of relevant regulatory frameworks. The original tripartite transactions also cover a wide range of realities, from pure non-monetary sharing to actual business, and in particular business-to-consumer (B2C) activities. A number of regulatory concerns arise as a result, not least of which concerns taxation.
Taxation issues in the collaborative economy increasingly highlight the need for an in‑depth look into taxation, focusing on the link between the value created and tax, and the need for a level playing field for incumbent business facing competition from these new entrants to the market. This need is manifold, matching the multifarious situations encompassed by the collaborative economy. Establishing a level playing field requires identifying taxpayers and the tax base (determining whether the income derived from the sharing economy is a main or ancillary professional source of income, as well as determining the tax status of the players in the collaborative economy with regards to other, in particular indirect, taxes). Clarification of the status of the parties involved in collaborative economy transactions is also necessary, to determine the related tax requirements. This is particularly tricky with regards to peer-to-peer (P2P) platforms where the providers can be individuals acting in a non-professional capacity, triggering tax consequences and results in multi-faceted compliance challenges. Finally, dealing with taxation in the collaborative economy requires a case‑by‑base and tax‑by‑tax approach that prevents a straightforward ‘one-size-fits-all’ approach.
Based on available examples of national and local regulatory approaches adopted so far, some possible paths can be drawn, bearing in mind that they are generally reactive, addressing the identified side effects, some of which are specific to the particular areas where the collaborative economy has developed. Cooperation with collaborative platforms to ensure providers’ tax compliance is one of them. Platforms can be proactive in cooperating with tax authorities to ensure exchange of information on tax obligations Some platforms may help in the tax declaration process by collecting information resulting from e‑transactions, and even collect some of the taxes, simplifying collection for tax authorities (e.g. local taxes relating to tourism). Action regarding B2C platforms fits into the ongoing reflection and action on digital business, as they share common features. Finally, addressing the tax challenges of the collaborative economy involves grasping its fast‑evolving, multi‑faceted reality, and fighting the narrative fog to understand exactly what the collaborative economy means.
Read the complete in-depth analysis on ‘The collaborative economy and taxation: Taxing the value created in the collaborative economy‘ in PDF.