III. AUTOMATIC INCOME REPORTING: SIMPLIFYING PROCEDURES AND SECURING TAX COLLECTION
A. A VIRTUOUS CIRCLE: VOLUNTARY REPORTING WITH AN INCENTIVE
The essential part of the Working Groups proposal is to create a virtuous circle, linking the benefit of the tax-free allowance of EUR 3,000 to automatic reporting of income .
It should be recalled that, since the vote of the Amending Finance Act for 2016, automatic reporting is already included in the Act, in Article 1649 quater A bis of the General Tax Code , which will compulsorily apply to all online platforms from 1 January 2019. The Working Groups proposal is therefore to amend this article, in order to improve its applicability, and to move from a mandatory mechanism whose application is uncertain to a voluntary but incentivising mechanism.
Automatic reporting to the tax authorities of the income of online platform users, which amounts to creating a new system of third-party reporting in addition to the existing systems (companies, financial institutions, notaries, etc.), is the only possible response, ultimately, to the challenge posed by the digital revolution both as regards the need to preserve tax revenue and therefore the quality of the public service, and the imperative of fair competition between the various actors of the same economic sector.
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Proposal No. 7 Make automatic income reporting the sine qua non condition to benefit from the EUR 3,000 tax advantage. The system would then be voluntary, simple and reliable, and would work as an incentive. |
As proposed by the Working Group, automatic income reporting therefore has four main characteristics :
It is voluntary . Users, on the one hand, will give their prior explicit agreement prior to the transmission of data about themselves. The platforms, on the other hand, will be able to choose to offer or not this service to their users , thereby enabling them to benefit from the tax advantage and from the reporting procedures being taken care of them on their behalf. Conversely, a compulsory system, devoid of any incentive would only be ignored by international platforms, while penalising young French start-ups, which would be required to implement a specific information system beginning on their first day of business;
It provides an incentive . Only income reported automatically can benefit from the general fixed allowance of EUR 3,000 , which allows private individuals simultaneously to have the guarantee of complying with tax law, and being little or not at all taxed on the related income. For the platforms, automatic reporting is an additional service offered to users , whether they are private individuals or professionals: a simplification of the administrative procedures, reliability of the reporting statements, etc. As such, it could even be a competitive advantage compared to uncooperativeplatforms;
It is simple . The only action required of the user is to give his agreement to reporting his income , and, if necessary, to provide his identification number (see below). All the rest of the procedure is carried out by the platform i.e. the annual transmission of the data, which are the same data as those indicated in the annual summary sent to the user. The reported income will then be included on the pre-filled taxpayers tax return which he will of course be able to correct if need be;
It is reliable . Most platforms are aware in real time and to the nearest euro of the amount of income received by their users. This is the case of all platforms providing a third-party payment service and many platforms which simply put people into contact with each other. In any event, platforms implementing automatic reporting will need to be certified under the conditions laid down in Article 242 bis of the General Tax Code , which guarantees the reliability of the information transmitted.
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What is the incentive for professionals? Users whose income derived from platforms is significant, i.e. when it exceeds the exitthresholds which result from application of the fixed allowance (i.e. EUR 4,225, EUR 6,000 or EUR 8,824), cannot benefit from the tax advantage . They are therefore subject to income tax under conditions of ordinary law, which is perfectly justified with regard to the principle of equality before taxation. That said, automatic reporting, as regards taxation as well as social contributions, still offers significant benefits to professionals : - it is a major simplification of administrative burdens , which is not negligible given the criticisms made regularly of the self-employed workerssocial security system (RSI) in this respect 70 ( * ) ; - it is a guarantee of tax compliance . Automatic reporting is comparable in this respect to the role of payment intermediaries that most contact platforms have : although from a strictly financial point of view, it is always more advantageous for the seller and the buyer to bypassthe platform, and to arrange things between each other rather than to pay a fee on each transaction (on average 15% 71 ( * ) ), the fact that the payment via the platform gives an entitlement to a series of guarantees and benefits generally means that the decision is made to use this system. With regard to self-employed workers, these benefits can be of great importance . For example, Hopwork offers its self-employed workers, customer relationship management and invoicing, pooled civil liability insurance and even a pooling of factoring to reduce payment times. |
* 70 Switching from the RSI to the general system is for example a demand expressed by 40% of self-employed workers registered on Hopwork . Source: Hopwork/Ouishare survey, February 2017.
* 71 Source: PwC study 2016, average commission levied by the platforms in Europe, all sectors of the collaborative economy combined.