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Sharing economy : revenues to be taxed in France

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The good thing with the sharing economy is that it has empowered individuals to make money. The bad thing is that governments haven’t been able to take much advantage of those new business models.

In France the sharing economy represents a turnover of €2.5bn and a workforce estimated to 13000. Needless to say, it was more than enough to get the attention of governments in desperate need of money since the financial crisis has begun in 2008.

In September 2015 the French senate proposed a project aiming at taxing all revenues from the sharing economy above 5000€ (source in French). Last week French socialist deputy Pascal Terrasse proposed to lower that limit to 2000€ to 3000€/year (article in French). A homogenous system, across all platforms and whatever the activity is foreseen. For instance, an individual renting out a space (room, apartment, house) on Airbnb will be taxed as soon as revenues will exceed the limit.

Sell your car on Ebay and you’ll have to pay taxes

More surprisingly one may also expect to pay taxes if he sells his car on Ebay (providing the price is above the threshold of course). Don’t forget Ebay remains a popular platform to sell vehicles. Even Brigitte Bardot sold her car on it ! A decade ago Ebay was “the biggest force in online automotive sales” (source: Fortune). Today it faces fierce competition from other free platforms (Leboncoin.fr to come back to a French example) which have further empowered consumers to bypass intermediaries when selling their cars.

However we find it unfair to tax individuals selling their used car to –most probably- buy a new one. Taxes were already paid when the car was sold : VAT was paid by the customer and the seller is subject to a 33,33% tax on his profits. Once it’s bought a vehicle is subject to a whole series of other taxes. The French senate evaluates the costs of owning a small car to 6150€/year (including insurance, taxes, as well as gasoline/diesel and their huge amount of taxes as we showed in another article last week).

Absurd situations ahead

Taxing all revenues homogenously, without exception, may create absurd situations. Imagine the State decides to promote environmental–friendly cars and tax heavily certain categories of vehicles. The market conditions will change and will push buyers to change their purchasing behaviors (this already happened in 2012 in Belgium under the Di Rupo government). Suddenly people will massively try to sell their cars to acquire new ones fulfilling the latest legal rules.

Such a situation would hit the consumer twice : he’d first have to pay taxes when selling his vehicle, and once again to acquire a new one. This situation is unfair because it removes all power of decision out of the consumer’s hands and leaves him with no option. Whatever he does, he loses.

Conclusion

Taxing revenues from the sharing economy is fair. There is no reason why some individuals could escape taxes, hence creating unfair competition with regular businesses. However governments must be very careful when drafting laws; they need to be adapted to the various situations encountered. We understand that every exception will also create room for tax escapement but there must be a middle way. Just taxing all revenues above a threshold of either 2000€, 3000€ or even 5000€ is a bad idea.

Image: courtesy Shutterstock
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Author: Pierre-Nicolas Schwab

Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)

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