“Collaborative economy”. Some comments on the occasion of the sentence where the Spanish Supreme Court pronounces on the case HomeAway Spain vs the Catalan regional administration.

The platform HomeAway (now Vrbo) provides intermediation services in the sector of tourism accommodation whereby it publicised apartments for rent by their owners, takes care of the reservation process including the collection of signals and offer a help-desk service obtaining a commission from hostess. The company running the website (HomeAway Spain SLU) was required by the Catalan administration to remove from the site all announces offered for tourism accommodation which did not comply with the obligation to mention the registration number requested by regulations for this sector in the Catalan region.

The matter being taken to Courts, it actually ended at the Spanish Supreme Court which, invoking the doctrine of the Court of Justice of the European Union (CJEU) in case C‑390/18 (Airbnb Ireland), concludes in its sentence of 30 December 2020 that the services provided by HomeAway constitutes an intermediation service qualifying as an information society service within the scope of article 2(a) of Directive 2000/31.  and, as a result, eligible for the limitation of responsibility regime contemplated therein. As a result, having not been considered by the Supreme Court that HomeAway had “actual knowledge of illegal activity or information” as required by article 14 of the Directive for being deemed responsible for the data stored,  the Supreme Court pronounces in favour of the company and against its obligation to remove the announces as required by the Catalan administration.

This sentence addresses to one of the many problems involved in the, among other names, known as “collaborative economy”, a phenomenon central in the, so called, fourth industrial revolution, an era where keeping pace with the tax and legal implications of the accelerated changes occurring in the processes and business models of companies constitutes a huge challenge.

Proof of the importance of this topic are the initiatives adopted by the European Commission, specially the Communication ”European Agenda for the Collaborative Economy ” which, submitted to the European Parliament and informed by its Committee on the Internal Market and Consumer Protection in a Report of 15 May 2017, was approved in the Resolution of 15 June 2017.

From a VAT point of view, there have also been pronouncements about the collaborative economy from some of the EU consulting bodies, such as:

• The VAT committee has issued guidelines and comments on this issue in several times, namely:

• Guidelines based in working paper Nº 878, resulting from the 105th meeting (October 2015) about the “VAT treatment of sharing economy”.

• Guidelines based in working paper No 906, resulting from the 107th meeting (July 2016) about the “interaction between electronically supplied services and intermediation services supplied in a digital environment”.

• Guidelines based in working paper Nº 919 resulting from the 108th meeting (March 2017) about the “Scope of the notion of electronically supplied services; minimal human intervention (second follow-up)”.

• Guidelines based in working paper Nº 947 resulting from the 111^th meeting (November 2018) about “Services provided by an electronic platform connecting for remuneration, by means of a smartphone application, a driver using his own vehicle with persons who wish to make urban journeys” (related to the judgement of the CJEU in case C-434/15 Uber Spain).

• Although no guidelines were issued, special mention require the comments formulated in working paper Nº 996 final, resulting from the 116th meeting (December 2020) about the “Services supplied by digital platforms intervening in short-term leasing or renting of immovable property” (on the occasion of addressing a question submitted by the Spanish tax authorities about the location rule applicable to services provided by Airbnb).

• The Group on the Future of VAT (GFV) discussed the VAT treatment of the sharing economy in its meeting of 5 April 2019, which conclusions were published in its document GFV Nº 086.

• Last, in April 2020 the VAT Expert Group (VEG) produced its working document VEG Nº 090 about the “VAT treatment of the platform economy”..

These documents make patent the complexity of the analysis required when determining the VAT regime of the different manifestations of the collaborative economy, where all the aspects involved must be considered, the tax regulations being just one piece of the puzzle and not always the most important.

Furthermore, the taxation of the collaborative economy is to be significantly conditioned by the pronouncements of the Court of Justice of the European Union (CJEU) related to the activity of platforms, such as  C-434/15  (Asociación Profesional Elite Taxi vs Uber Systems Spain, SL), C-320/16 (Uber France SAS vs Nabil Bensalem) or the mentioned C‑390/18 (Airbnb Ireland UC vs Hôtelière Turenne SAS).

Although the questions to be decided by the CJEU in these cases do not relate to determining the VAT regime, the Court pronounces about an issue that is critical for such a task, as is deciding about the nature of the services that are provided by the platform. According to the CJEU:

• In the Uber cases, the Court considers that the platform goes further than being a mere intermediary as regards the subjacent transport service and constitutes itself a provider of services in the field of transport.

• However, for the case of Airbnb the Court concludes it to be an intermediation service qualifying as an information society service within the scope of article 2(a) of Directive 2000/31.

The consequence is that, meanwhile Uber is sentenced to comply with the transport sectorial regulations of the country (Spain or France), the Court relieves Airbnb from the obligation to comply with the real state regulations of the country it operates (France). As shown by the frequent references to these cases in the abovementioned documents of the VAT Committee, the arguments of the Court leading to a different treatment of legal status, are likely to be also critical when determining the VAT treatment.

Since of actuality, it is to be mentioned that such a different nature of the services provided by UBER according to the CJEU, has played no minor role in the legal troubles the company is having in the UK where the non-professional drivers have been sentenced to be its employees and which, on top, is certainly leading to a big VAT liability in this country.

In any case, going further into the VAT implications of collaborative economy clearly exceeds the scope of this entry to the blog, so let us conclude quoting action 23 of the Communication from the European Commission about “An action plan for a fair and simple taxation supporting the recovery strategy” (July 2020) which aim is to “ Adapt the VAT framework to the platform economy”:

“The rapid development of the platform economy raises questions as regards the VAT treatment of the transactions between users facilitated by the platforms (are the persons offering services or goods on the platforms taxable persons for VAT or not?) and of the services provided by the platforms (what is the nature of that service?). The Commission will present a legislative proposal to amend the VAT Directive that should provide clarity and legal certainty to the actors involved. Also, the role platforms could have in securing the collection of the tax will be examined.”