No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
VAT and the Sharing Economy, 10 World Tax Journal 3 (2018)
Abstract
The sharing economy, underpinned by digital platforms like Airbnb and Uber, which pair individuals’ needs and wants, from accommodation to rides, is on the ascent. These new business models, where capital and labour are provided by several dispersed individuals rather than by a single centralized entity, defy the operational structure of comparable traditional activities. In the sharing economy, in fact, the personal and the professional spheres blur, and selfish motivations mingle with altruistic aims, while transactions span the whole market-to-gift spectrum. Against this background, in which the classification of individuals and transactions is less straightforward, the article intends to assess the practical feasibility of specific EU VAT notions such as “taxable persons” and “taxable transactions”, as interpreted by the ECJ and the VAT doctrine. In addition, the research seeks to test these concepts against a framework of selected tax principles.
... 1.3.3. For an analysis of VAT treatment of the sharing economy, see for instance Beretta [2]. 112 Terra, Kajus [20], Sect. ...
... In case of suppliers not established in the European Union, where the place of supply is within one of the European Union's tax jurisdictions, 120 the collection of VAT on that supply depends on the compliance by the non-established supplier, and thus the risk of VAT revenue loss is not eliminated. To address those disadvantages, the Commission proposed to apply an exemption with a right to deduction to the first transaction in the chain of transactions covered by Article 14a (2). 121 It should be added that, where Article 14a(1) is applicable and under an assumption that the transport is deemed to be ascribed to the second supply of goods (B2C supply), the place of supply of goods to a platform is outside the territorial scope of application of the VAT Directive, and its treatment will depend on the solution adopted in a given tax jurisdiction. ...
Removing obstacles to e-commerce in the Single Market and ensuring effective taxation in the context of the digital economy has been high on the political agenda both in the European Union and beyond. Recently the VAT rules on cross-border e-commerce have gone through a thorough modernisation with a package of new provisions in the EU VAT legislation coming into effect as of 2019 and 2021. Further measures with the objective of laying down solid foundations for an effective, fair, simple and fraud-resistant taxation of e-commerce transactions have been envisaged. This article helps to navigate a complex set of new provisions and offers reflections on whether the new rules will achieve their objective.
El uso de plataformas digitales para la prestación de servicios y venta de bienes se ha intensificado en los últimos años, transformando el funcionamiento de los mercados. Estas transacciones han puesto en cuestionamiento algunos pilares sobre los que se ha venido asentando la fiscalidad, debido a las obligaciones tributarias generadas. Al mismo tiempo, se crean nuevas oportunidades para ayudar tanto a las administraciones tributarias como a los contribuyentes en la aplicación del sistema tributario, facilitando también su consiguiente control.Tomando en consideración que las plataformas digitales están llamadas a configurarse como importantes agentes colaboradores de la administración tributaria, a lo largo del presente artículo, las autoras identifican la forma en que inciden en la aplicación y recaudación de tributos. Primero, toman el tema de la aplicación de tributos, repasando las tareas y obligaciones propias de estas plataformas con relación a ello. Luego, abarcan el tema de la recaudación de los mismos y la forma en que las plataformas colaboran con aquello.
The Collaborative Economy is one of the major revolutions arising from Digitalisation. It has brought efficiencies for consumers through lower prices and greater variety, while facilitating access to the job market for thousands of people. Growing relentlessly, it re-shaped transportation, accommodation, financial services and education, to name a few areas where it is present. Such expansion, however, has not been free from challenges and conflicts are well-known, especially those regarding the taxation of platforms and the legal classification of users providing services in them.
Left aside until very recently, the taxation of the abovementioned service provider soon became a conundrum for which the legal framework could only provide patching solutions: its activities remained obscure to tax authorities and, even worse, the reduced tax obligations that actors in the Collaborative Economy had to bear were rarely fulfilled.
The entry into force of the recently adopted seventh Directive on Administrative Cooperation will bring this invisibility to an end by requiring platforms to report payments received by each user. Nevertheless, the relevance of this piece of legislation goes far beyond enhancing transparency, its major achievement being the provision of definitions enclosing the whole Collaborative Economy. By doing so, the foundations for the development of a tax system have been laid, and properly addressing the challenge posed by platform sellers is an objective that seems to be at reach for European Tax Law.
Whether this will mean designing new tools or whether the existing ones will suffice is a matter for debate. However, the overall current setting of the tax on income and the VAT in Europe is undeniably ill-suited, as it places such a burden for
compliance upon service providers that occasional dedication to the collaborative economy is rendered extremely unattractive, therefore preventing consumers as a whole from taking advantage of the lower prices that come with it.
Any modification of the current tax system would require delegating some of these responsibilities to platforms, which are much better prepared to handle them in the most efficient way. Complementarily, a system with these characteristics will need to ensure that obligations go hand in hand with the level of dedication to Collaborative Economy activities, so that individuals who merely put at the disposal of others their under-utilized assets occasionally will not be charged in the same way as professionals.
This objective can be achieved through a schedular definition that provides a separate treatment for the income coming from Platform Economy activities. Such treatment, notwithstanding, does not need to be significantly different from the one given to the rest of income. It suffices a first band for which the tax rate will be zero or close-to-zero to capture occasional activities, and a progressive system on top of it that compensates for the previous exemption, so that the average tax rate for service providers working on a continuing basis is maintained similar to that of other traditional economy workers.
Cases C-250/14 and C-289/14, Air France-KLM and Hop!-Brit Air SAS v. Ministère des Finances et des Comptes Publics, ECJ Case Law IBFD), the Court ruled that payments made by customers for a flight that they did not take were not to be treated as a compensation for damages
- Int
Int. Vat Monitor 6, pp. 430-437 (2008). In Air France -KLM (FR: ECJ, 23 Dec. 2015, Cases C-250/14 and
C-289/14, Air France-KLM and Hop!-Brit Air SAS v. Ministère des Finances et des Comptes Publics, ECJ
Case Law IBFD), the Court ruled that payments made by customers for a flight that they did not take were
not to be treated as a compensation for damages, which is not subject to VAT, but rather constituted the
consideration for a taxable supply.
C-215/94, Mohr, paras. 20-22. For a comment, see A.L.C. Simons, EC Court of Justice Recognizes the Legal Character of VAT, 5 EC Tax Review 2
ECJ, 29 Feb. 1996, C-215/94, Mohr, paras. 20-22. For a comment, see A.L.C. Simons, EC Court of Justice
Recognizes the Legal Character of VAT, 5 EC Tax Review 2, pp. 87-90 (1996).
Against this remark, Van Hilten, supra n. 68, at p. 6, instead argues that "in the Apple and Pear case … consumption does in fact takes place for VAT purpose
- Pear Apple
Apple and Pear (102/86), para. 14. According to Simons, supra n. 191, at p. 90, in both Coöperatieve
Aardappelenbewaarplaats and Apple and Pear, "the verdicts would be better argued and more understandable if they were based on the absence of any kind of consumption by the receiver". Against this
remark, Van Hilten, supra n. 68, at p. 6, instead argues that "in the Apple and Pear case … consumption
does in fact takes place for VAT purpose", since, "although the subscribers/contributors may benefit
as a group rather than as individuals form the activities of the organization they subscribe, consumption can … be deemed to occur because of the group of the beneficiaries being limited and, therefore,
identifiable".
Asparuhovo Lake Investment Company OOD v. Direktor na Direktsia "Obzhalvane i danachno-osiguritelna praktika" Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite
Tolsma (C-16/93), para. 16.
199.
NL: 21 Mar. 2002, Case C-174/00, Kennemer Golf & Country Club v. Staatssecretaris van Financiën, para.
40, ECJ Case Law IBFD; FR: ECJ, 27 Mar. 2014, Case C-151/13, Le Rayon d'Or SARL v. Ministre de l'Économie et des Finances, paras. 36-37, ECJ Case Law IBFD; BG: ECJ, 3 Sept. 2015, Case C-463/14, Asparuhovo
Lake Investment Company OOD v. Direktor na Direktsia "Obzhalvane i danachno-osiguritelna praktika"
Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite, para. 39, ECJ Case Law IBFD.
180; European Commission, Value Added Tax Committee, supra n. 122, at pp. 9-10. 207. European Commission, Value Added Tax Committee
- See Pfeiffer
See Pfeiffer, supra n. 180; European Commission, Value Added Tax Committee, supra n. 122, at pp. 9-10.
207.
European Commission, Value Added Tax Committee, supra n. 122, at pp. 9-10.
the verdicts would be better argued and more understandable if they were based on the absence of any kind of consumption by the receiver
- Pear Apple
Apple and Pear (102/86), para. 14. According to Simons, supra n. 191, at p. 90, in both Coöperatieve
Aardappelenbewaarplaats and Apple and Pear, "the verdicts would be better argued and more understandable if they were based on the absence of any kind of consumption by the receiver". Against this
Notably, the Spanish Commercial Courts found that Airbnb and BlaBlaCar were mere intermediaries that supply an electronic service to their users and that do not take part in the underlying service. See 189. FR: ECJ
What has been found for Uber is not, in fact, necessarily applicable to other sharing economy platforms.
Notably, the Spanish Commercial Courts found that Airbnb and BlaBlaCar were mere intermediaries
that supply an electronic service to their users and that do not take part in the underlying service. See
189.
FR: ECJ, 18 July 2007, Case C-277/05, Société thermale d'Eugénie-les-Bains v. Ministère de l'Économie,
des Finances et de l'Industrie, paras. 31-32, ECJ Case Law IBFD. The ECJ, however, reached a different
conclusion in Lubbock Fine (UK: ECJ, 15 Dec. 1993, Case C-63/92, Lubbock Fine & Co. v. Commissioners
of Customs and Excise, ECJ Case Law IBFD), although involving a similar situation. For a critical comparison of the two decisions, see J. Swinkels, Cancellation Charges and Compensations under EU VAT, 19
The fact that the price constitutes a subjective value is a direct consequence of the legal aspect of the neutrality principle as enshrined in art. 1(2) VAT Directive, i.e. VAT being "exactly proportional to the price of the goods and services
Coöperatieve Aardappelenbewaarplaats (154/80), paras. 12-13. The fact that the price constitutes a subjective value is a direct consequence of the legal aspect of the neutrality principle as enshrined in art. 1(2)
VAT Directive, i.e. VAT being "exactly proportional to the price of the goods and services". This circumstance consents to include under the scope of VAT also goods and services supplied for a "political price".
193.
R. Pincher, Is There a Link?, British Tax Review 3, p. 306 et seq. (1995).