A few days ago (September 4) in this blog, an excellent post by Alejandro Gabriel Rasteletti titled “The Collaborative Economy and challenges for tax policy and administration” that has led me to reflect on this new reality was published.

I totally agree with Alejandro to point out the advantages of the collaborative economy: it helps suppliers and customers to come into contact and relate easily, is transparent in the sense that the comparison between products and prices can be made immediately and mobilizes assets that would otherwise be sidelined by economic activity. But, of course, to the extent that it deviates from the traditional business models, it poses an important challenge from the tax policy and tax control viewpoint.

At the European level, for the European Commission, the collaborative economy consists of business models that, through collaborative platforms, create an open market for the temporary use of goods or services often offered by individuals, hence the definition is broad and there are various affected sectors.

In the housing sector alone, the collaborative economy moves about 1.15 billion euros a year in Europe and it grows exponentially (source: PWC). In Spain 6% of the citizens say they have used services of this type (source: ING), when a few years ago this was completely unknown. On the other hand, the price difference between the traditional housing leases and the tourist leases through collaborative platforms reach 46% between housing rental housing and tourist lease (Source: EY), which is causing a real revolution in the rental housing market and a great controversy about “responsible” and “sustainable” tourism.

In the tax field, we have two initial issues to be resolved: the taxation of the collaborative platforms and the taxation of the service offerors. Also, of course, we have to deal with the problem of control of activities.

The first issue, the taxation of collaborative platforms, is very complex, but does not constitute something new in the BEPS and post-BEPS era: The challenge is to obtain from large transnational corporations that provide digital services to pay their taxes in the different countries in which they operate according to the generation of real value in each one of them. In Europe, France, Germany, United Kingdom, Italy and Spain have announced an initiative to tax these companies depending on their sales in each territory, and not only the benefits they declare in each one. We will see how this initiative is implemented. It currently has received the support of 10 countries of the European Union, and which can be its framing in international corporate taxation and its possible impact on the taxation of collaborative platforms.

Let’s now review the taxation of the offerors. In the European tax field, incentive initiatives coexist with attempts to implement the general taxation regime for the new activities.

An important initial issue is the distinction between businesses and collaborative systems based on shared expenses, for example, when a person who is going to make a journey offers to share his car to other travelers, sharing expenses (fuel, tolls). If there is no profit motive, there seems to be no tax consequences for the offeror.

However, the same is not the case when the provider gains an economic benefit, although, as Alejandro explains, some countries have decided to set exemption thresholds or reduced tax rates.

It’s not the case in Spain. To simplify, since the collaborative economy can be extended to very diverse areas, let us see how the income is taxed in the amounts perceived by the offeror in cases of housing offers.

In the tourist leases, if we may call them as such, the perceived income can have the consideration of yield derived from an economic activity for the offeror if the cession of the house is accompanied by complementary services similar to an hotel, with the following effects on VAT, or, even, without providing such services, when the ceded property or real estate are managed as a business (the Spanish law establishes that it will be so if the landlord has at least one employee hired full-time to manage the lease activity).

If we do not find a business activity, the amounts received by the offeror will have the consideration of real estate capital returns. In this case, the costs of intermediation (payments to the platform) will be deductible, as will be the rest of the expenses of the activity, with the requirements and limits that the general regulation establishes for the non-commercial real estate leases.

In any case, the Spanish owners who are applying the deduction for investment in housing (by virtue of transitory rules since this deduction disappeared in 2013) have to be especially careful because if, to take advantage of the boom of the tourist rentals, they give up their house for rent, even if for a short time, they will lose the right to deduction. So there may be some conflict.

There are also cases of tenants who sublet a property, in this case, in accordance with the Spanish regulations the sums received by the subtenant are considered capital returns.

Moreover, regardless of the personal tax, tourist rates have proliferated, i.e., levies established by the autonomous communities or local authorities, which are normally required from the tenant. In July, the Experts Committee established in Spain to improve local funding proposed to generalize a standard tax on tourist stays that would be of optional application for the municipalities.

Therefore, in a tourist lease we have to analyze the respective taxation of the collaborative platform, the owner and the tenant.

Another key aspect is the information provided by the tax administration to control the correct declaration of tourist leases. At the moment, a regulatory amendment is being processed in Spain that establishes the obligation to present an informative statement by the individuals and entities that mediate between the offerors and tenants of housing for tourist purposes, clarifying the standard under which, in particular, they are obliged to report the collaborative platforms.

The use of housing for tourist purposes is defined as the temporary transfer of use of the whole of a furnished and equipped house in conditions of immediate use, whatever the channel through which it is marketed or promoted and carried out with lucrative or onerous purpose.

The new statement will require the identification of the owner of the property and the user, as well as the property, the indication of the number of days of transfer and the amount received by the offeror. The new obligation is being very criticized by the platforms, especially the fact that the user of the service must also be identified and not only the offeror.

In the meantime, the general guidelines of the annual control plan of the Spanish Tax Agency emphasize that the technological possibilities are leading to the development of new business models that represent new challenges from the point of view of the tax control, both in terms of their detection, and in relation to obtaining information concerning the activities carried out and the verification of the correct taxation of such activities. Therefore, investigating and obtaining information related to the new models of economic activity is a priority for the Tax Agency.

746 total views, 1 views today