International Tax Monitor™
Source: International Tax Monitor: News Archive > 2016 > July > 07/06/2016 > News > Belgium: Belgium Leads in Adopting Law to Tax Sharing Economy
By Linda A. Thompson
July 5 — Amateur cooks supplying food over online platform Meetsies, travelers who take on deliveries during their trips through site PiggyBee, and other private individuals providing peer-to- peer services through online collaborative platforms will be taxed at a rate of 20 percent to 50 percent under a new law adopted by Belgium.
The law, dated July 1 and in force from that date, establishes the first clear withholding tax rules for the country’s growing peer-to-peer economy.
The new regime covers only services offered by private individuals and doesn’t apply to platforms that sell goods such as eBay, or platforms that allow individuals to rent out immovable property such as Airbnb Inc.
The 20 percent rate applies for those providing services under 5,000 euros ($5,576) in annual gross revenue. Individuals who exceed the 5,000-euro threshold will have all the income earned through the platforms taxed as “professional income” under the usual progressive tax rates from 25 percent to 50 percent. The tax regime will be included in a new category in the personal income tax return known as “miscellaneous revenue,” normally taxed at a rate of 33 percent.
The measure is part of the government’s budgetary control initiatives. It was published in the Belgian Official Gazette July 4 and is part of the Program Law of July 1, 2016, which also introduces new transfer pricing documentation requirements into Belgian law as part of OECD’s action plan against base erosion and profit shifting.
Tax practitioners said the law lifts peer-to-peer platforms and their users out of a fiscally grey area.
“With this law on the sharing economy, together with the tax shelter law for start-ups, Belgium and Brussels become the European hotspot to launch and run a sharing economy platform,” said Erik De Ridder, jurist and CEO at the Brussels- based consulting firm De Ridder Consulting.
The tax shelter for start-ups was introduced by the Belgian government in July 2015 and offers individuals who invest in small start-up companies a tax deduction of 30 or 45 percent of the invested amount, depending on whether they finance an SME or micro-enterprise.
Until now, revenue earned through peer-to-peer platforms was taxed as income from immovable property, income from moveable assets or miscellaneous revenue under the 1992 Belgian Income Tax Code.
“With this law, Belgium becomes the first European country with a tailored framework for sharing economy platforms” such as the delivery platform PiggyBee, the chores platform Listminut and meal-sharing platform Meetsies, De Ridder said in a statement e-mailed to Bloomberg BNA July 5.
The new law establishes a “fiscally favorable regime” aimed at encouraging taxpayers to “spontaneously report” income earned through sharing platforms so that this “undeclared revenue no longer escape taxes,” said Jan Willem Meugens, jurist and tax adviser at Belgian firm Van Havermaet Groenweghe.
Platforms need to obtain certification from the tax authorities to become eligible for the tax regime. Certification requirements haven’t been announced yet. The law doesn’t impose VAT requirements.
In a statement e-mailed to Bloomberg BNA July 5, Meugens said this certification requirement might have the effect of straitjacketing the peer-to-peer economy, which is rapidly moving and highly varied.
Noting that new sharing platforms would likely crop up in the future, he said: “It remains to be seen whether a platform that obtains the required certification from the government will be developed as quickly for new sharing economy activities.”
Under the new law, the online sharing platforms will be responsible for levying the 20 percent withholding tax and passing
on the collected taxes to the tax authorities.
“Although this withholding tax represents a simplification for the person providing the services, the withholding and stub requirement will represent an additional administrative burden for the online platform,” Meugens said, adding that this likely wouldn’t be a problem for “the well-organized, bigger players.”
He noted that the withholding requirement might represent “too great an obstacle” for the smaller existing online platforms should they obtain certification. “Will the organizers still take the step to become a certified online platform if that will mean more and more rules and requirements for them in the future?” he asked.
No Fiscal Surprises
Platforms each year will be required to send taxpayers a stub with a description of the performed services, the amount of the income earned and the amount of the withheld sums. They will need to send the same information to the tax authorities.
The platforms will need to install the necessary accounting software to report their activities in a completely transparent manner to the government, De Ridder said.
“This will give them the certainty that their business model will be accepted and they won’t need to expect any legal or fiscal surprises from the government and that they consequently can focus on their core activities.”
For More Information
The law, published in the Belgian Official Gazette in Dutch, is at http://src.bna.com/guu.
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