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ABSTRACT
In this contribution the author analyses the relationship between the sharing economy and the EU VAT notion of taxable person. After an introduction where the sharing economy and the relevant legal framework are presented, the statutory and jurisprudential components of the notion of taxable person are assessed against the single peculiarities of the ‘new economy’. Special attention is given to the stability of the economic activity, which under the current system is one of the key elements in the identification of VAT taxable persons. In the last paragraph, some ideas to improve the system are discussed.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 See, among others, Nestor M Davison/John J Infranca, ‘The Sharing Economy as an Urban Phenomenon’ (2016), Yale Law & Policy Review, 34:2, 215.
2 See the Briefing ‘Social, Economic and Legal Consequences of Uber and Similar Transportation Network Companies (TNCs)’ of the European Parliament, available on the official website ‘www.europarl.europa.eu’, p. 1. More in general, see also Shelly Kreiczer-Levy, ‘Consumption Property in the Sharing Economy’ (2015), Pepperdine Law Review, 43:1, 61.
3 The sharing economy is often considered as the ‘digital economy’. Theoretically, this qualification is arguable because the ‘digital’ element is missing and the same activities could be carried out by using, for example, advertisements in newspapers. On the other hand, it is also self-evident that the boom of the sharing economy has been made possible only by the Internet, and therefore it is not wrong to consider it as the ‘digital economy’ in a broad sense. For a more general and non-EU view, see among others Jennifer M Leaphart, ‘Sharing Solutions: An Analysis of Taxing the Sharing Economy in the United States and Europe’ (2016), Tulane Law Review, 91:1, 189; Daniel K McDonald, ‘Is the Sharing Economy Taxing to the Traditional?’ (2017), Florida State University Business Review, 16, 73.
4 See also Giorgio Beretta, ‘The European Agenda for the Collaborative Economy and Taxation’ (2016), European Taxation, 400; Giorgio Beretta, ‘The Taxation of the Sharing Economy’ (2016), Bulletin for International Taxation, 70, n. 11, published online on 20 October 2016.
5 These data are published in Value Added Tax Committee, Working Paper No 878, VAT Treatment of Sharing Economy, taxud.c.1(2015)4370160, Brussels, 22 September 2015, available on the official website www.ec.europa.eu. At p. 2 of the Introduction one of the most exhaustive definitions of sharing economy is proposed: ‘ … Sharing economy is a socio-economic phenomenon based on sharing of human and physical resources. It includes the shared production, distribution and consumption of goods and services by people and organisations. It has evolved from a type of transaction between the friends and family to a global movement of businesses’.
6 See PWC, ‘The Sharing Economy’, available on the PwC ‘international’ website www.pwc.com. Most the data reported in this paragraph are taken form this source, and more precisely from chapter IV, ‘The Business of Sharing’, and ‘What the Sharing Economy Means for your Business’.
7 On a more general note, see, among others, Erez Aloni, ‘Pluralizing “Sharing” Economy’ (2016), Washington Law Review, 91, 1397.
8 See the Briefing of the EPRS (European Parliamentary Research Service) released in September 2015, titled ‘The Sharing Economy and Tourism’, available on the official website www.europarl.europa.eu. At pp. 3–4 some data on the ‘example of Airbnb’ are provided and, among others, it is reported that ‘a recent Boston University study estimated that Airbnb reduced hotel revenue in the market studied (Austin, United States) by 8–10% between 2008 and 2014’. See also Marco Allena, ‘The Web Tax and Taxation of the Sharing Economy: Challenges for Italy’ (2017), European Taxation, 304.
9 For a deep analysis of this topic, see also Cristina Trenta, VAT in Peer-to-peer Content Distribution, JIBS Dissertation Series No 090, 39.
10 See also Case C-186/89, Van Tiem/Staatssecretaris van Financiën, EU:C:1990:429, para 25. The Court itself remarks that ‘[In accordance with the purpose of the Sixth Directive], which is inter alia to found a common system of VAT upon a uniform definition of “taxable persons”, that status must be assessed solely on the basis of the criteria set forth in Article [4 of the Sixth Directive]’.
11 See also Ben JM Terra and Peter J Wattel, European Tax Law (Kluwer Law International 6th edn, 2012), 305. With regard to the definition of taxable person provided by the Directive, the authors use the expression ‘global term’: ‘a global concept is applied. Any person may be a taxable person and therefore be entitled to recovery of input VAT’.
12 Case C-369/04, Hutchison 3G e a., EU:C:2007:382, para 29.
13 This concept of ‘vagueness’ and this analysis are already exhaustively proposed by Aleksandra Bal, ‘The Vague Concept of “Taxable Person” in EU VAT Law’ (2013), International VAT Monitor, 294.
14 Case C-25/03, HE, EU:C:2005:241, para 48.
15 See Working Paper No 878 (n 5), 2–3. See also Ivo Grlica, ‘How the Sharing Economy is Challenging the EU VAT System’ (2017), International VAT Monitor, 124, and, on a more general note, Giorgio Beretta, ‘The Taxation of Individuals in the Sharing Economy’ (2017), Intertax, 45:1, 2.
16 See also Working Paper No 878 (n 5), 3.
17 See Working Paper No 878 (n 5), 11–12. It has to be noted that for the purposes of this chapter that the question whether an exemption applies once the transaction is considered as falling within the scope of VAT.
18 Case C-219/12, Finanzamt Freistadt Rohrbach Urfahr, EU:C:2013:413.
19 Ibid, paras 36 and 37.
20 Case C-97/90, Lennartz / Finanzamt München III, EU:C:1991:315.
21 Ibid, paras 15, 16 and 17.
22 Case C-268/83, Rompelman/Minister van Financiën, EU:C:1985:74.
23 Ibid, para 13.
24 Case C-230/94, Enkler, EU:C:1996:352.
25 Advocate General Cosmas in his opinion reports that the German Tax Office talks about ‘objectively verifiable criteria’. See Case C-230/94, Enkler, EU:C:1996:145, Opinion of AG Cosmas, para 7.
26 Case C-267/08, SPÖ Landesorganisation Kärnten, EU:C:2009:619.
27 Ibid, paras 24 and 25.
28 Case 89/81, Hong Kong Trade Development Council, EU:C:1982:121.
29 Ibid, para 13.
30 On the concept of ‘direct link’ in the field of VAT see also Case C-16/93, Tolsma, EU:C:1994:80, paras 13 and 14.
31 Case C-412/03, Hotel Scandic Gåsabäck, EU:C:2005:47.
32 Enkler (n 24).
33 Case C-155/94, Wellcome Trust Ltd, EU:C:1996:243.
34 Ibid, paras 24, 25 and 26.
35 Ibid, para 32. The Court recalls also some settled case-law and, in particular: Case C-60/90, Polysar Investments Netherlands, EU:C:1991:268, para 13; Case C-333/91, Sofitam, EU:C:1993:261, para 12.
36 Ibid, para 37.
37 See also Case C-155/94, Wellcome Trust, EU:C:1995:426, Opinion of AG Lenz, para 22.
38 Ibid, para 32.
39 See Bal (n 13), 295: ‘the requirement of continuity should not be understood as meaning that, in order to qualify as a taxable person, a person must enter into a series of transactions. Wellcome Trust Ltd was the sole trustee of a charitable trust. It sold a large number of shares that it had held for several years and reclaimed VAT on expenses incurred in relation to that sale. The transaction itself took place on one day but it required extensive preparatory work and assistance of investment advisers’.
40 Case C-263/11, Rēdlihs, EU:C:2012:497.
41 Ibid, para 20.
42 Ibid, para 37.
43 Cases C-180/10 and C-181/10, Słaby and Kuć, EU:C:2011:589.
44 Ibid, paras 12–15.
45 Of course, there is no need to remark that if the Member State exercised the option provided by Article 12 of the VAT Directive the supply of building land would fall within the scope of the tax without any doubt; see para 35 of the judgment.
46 See also Bal, (n 13), 296.
47 Case C-62/12, Galin Kostov, EU:C:2013:391.
48 Ibid, para 32.
49 For a comparison see, among others, Sijbren Cnossen, ‘The Technical Superiority of VAT over RST’ (1987), Australian Tax Forum, 4, 419.
50 Practical experience shows that many times simple ‘retail sales taxes’ include in their scope only the supply of tangible properties. Among others, see Timothy R Hurley, ‘Curing the Structural Defect in State Tax Systems: Expanding the Tax Base to Include Services’ (2010), Mercer Law Review, 491.
51 See Joachim Englisch, ‘“Hybrid” forms of taxing consumption: A viable alternative to EU VAT?’ (2015), World Journal of VAT/GST Law, 4:2, 119.
52 Under the current system, the supply of goods does not seem to raise specific issues in respect of sharing economy and of the notion of taxable person. Problems caused by the supply of goods in the context of digital economy, like those highlighted by the OECD in the BEPS Action 1, call for different solutions. See, among others, Marcel Olbert and Christoph Spengel, ‘International Taxation in the Digital Economy: Challenge Accepted?’ (2017), World Tax Journal, 3.
53 The document is available on the official website www.taxpolicy.ird.gov.nz.
54 See, among others, New Zealand Government, White Paper on Goods and Services Tax: Proposals for the Administration of the Goods and Services Tax, (1985); Howell H Zee, John King, Barrie Russell and Alan Schenk, ‘Technical and Administrative Issues in Introducing a Goods and Services Tax’ (2001) (IMF Publications); Roger Douglas, The New Zealand GST Policy Choice and its Political Implications, in Rick Krever and David White (eds), GST in Retrospect and Prospect (Thomson Reuters, 2007), 3; David White, ‘Comment: Twenty Years of GST The Best Path Forward’ (2007), New Zealand Journal of Taxation Law and Policy, 13, 357; Eugen Trombitas, ‘GST One of our Best Exports’ (2012), PwC Media release (28 January); available at: http://www.pwc.co.nz; Adrian Sawyer, ‘New Zealand's Successful Experience Introducing GST: Informative Guidance for Hong Kong’ (2013), Hong Kong Law Journal, 43, 161.
55 See, among others, Evelyne Terryn, ‘The sharing economy in Belgium—a case for regulation?’ (2016), Journal of European Consumer and Market Law, 5:1, 45; Inara Scott and Elizabeth Brown, ‘Redefining and Regulating the New Sharing Economy’ (2017), University of Pennsylvania Journal of Business Law, 19:3, 553.