The Programme Act of 1 July 2016 introduces a new fiscal and social regime for the sharing economy. Subject to strict conditions, the new regime offers an attractive and straightforward framework for providing services within the sharing economy.
With well-known leading initiatives such as Uber and Airbnb, the sharing economy is gaining importance. Electronic platforms are bringing together providers and demanders of services and are intervening in the financial transactions between them.
With the Programme Act of 1 July 2016, the legislator aims to explicitly regulate the social and fiscal treatment of activities within the sharing economy.
The preparatory documents also indicate that, through this initiative, the legislator wishes to support and encourage entrepreneurship in the long term as well as the sharing economy itself. Hence, a favourable fiscal and social regime aimed at offering an attractive and straightforward framework for the sharing economy has been put in place.
Field of application of the favourable regime
The field of application of the favourable fiscal and social regime remains extremely limited, since the regime only applies to services. The renting of movable and immovable property and the provision of capital are among the activities explicitly excluded from the field of application of the regime.
The application of the favourable regime is dependent on the following strict conditions:
- the services are not related to the independent professional activity of the provider;
- the services are provided exclusively to individuals;
- the services are provided exclusively through a recognised electronic platform or an electronic platform organised by the government; and
- the services are paid for or awarded to the provider exclusively by (intervention of) the recognised platform.
Moreover, the favourable regime only applies when the gross amount of the revenues from the services provided within the sharing economy does not exceed a threshold of EUR 5,000 (the figure for fiscal year 2017) in the current fiscal period or in the previous fiscal period. It should be noted that the threshold for 2016 amounts to EUR 2,500, since the new regime only entered into force on 1 July 2016.
Taxation as diverse revenues and VAT exemption
If the above-mentioned conditions are fulfilled, the revenues from activities within the sharing economy are considered to be "diverse revenues". These revenues are taxed separately at a rate of 20%, after deduction of a fixed cost reduction of 50%. The actual rate thus amounts to 10%. The electronic platform is supposed to withhold this tax in the form of a withholding tax and to report these revenues on tax slips. This withholding tax would not be liberating, and the revenues should thus be included in the individual’s personal income tax declaration.
Moreover, under certain conditions, these revenues are exempted from VAT and the providers will have to comply with hardly any VAT formalities.
Exclusion from the field of application of the social security scheme for the self-employed
The Programme Act of 1 July 2016 also modifies Royal Decree no. 38 of 27 July 1967 concerning the introduction of the social security scheme for the self-employed. According to the newly introduced article 5ter, people who generate an income within the sharing economy are not subject to the social security scheme for the self-employed, provided that the application conditions mentioned above are fulfilled. Therefore, no social security contributions are due on these incomes, and providers should not register their activity as a principal or secondary self-employed activity. 25% of the above-mentioned tax is used for the global financial management of the social security scheme for the self-employed.
Revenues in the sharing economy exceeding EUR 5,000
If the revenues earned within the sharing economy exceed the threshold of EUR 5,000 during the current fiscal period or the previous fiscal period, in principle, the favourable fiscal and social regime does not apply. In that case, the entire revenues are refutably presumed to be professional earnings and the provider is considered to fall within the social security scheme for the self-employed.
At present, it is not clear how this regulation relates to, for example, the newly introduced obligation for self-employed individuals to register with a social insurance fund for the self-employed or the National Fund before starting their professional activity (see Eubelius Spotlights September 2016). Therefore, caution is advised when applying the favourable fiscal and social regime.