C. THE EXEMPTION OF COST-SHARINGBY THE TAX INSTRUCTION OF 30 AUGUST 2016: A WELCOME BUT TOO NARROW CLARIFICATION
The only significant development as regards the taxation of income derived from online platforms is t he tax instruction of 30 August 2016, which has clarified the definition of cost-sharing for so-called co-consumptionactivities. Long awaited by the platforms, this tax instruction has the merit of bringing together the criteria that can allow an exemption for cost-sharing , criteria that up to then were scattered, confused, and sector-specific rather than fiscal in nature.
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Non-taxation of income received within the
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Tax instruction of 30 August 2016 excerpts In accordance with Article 12 of the General Tax Code, income realised by private individuals for their activities of any kind is in principle taxable, including income from services rendered to other individuals when the contact is facilitated in particular by collaborative platforms. However, not taxing income derived from co-consumptionactivities which are cost-sharing is accepted provided that they comply with the following cumulative criteria related to the nature of the activity and to the amount of shared expenses . Where these criteria are not met, the realised income is a profit taxable under the conditions of ordinary law []. 1 st condition: income received for co-consumptionby private individuals The income realised by a private individual for cost-sharing which can benefit from the exemption is that received for co-consumption, i.e. the provision of a service which also benefits the private individual who offers it , and not only the persons with whom the costs are shared. Income received by legal persons or income received by natural persons for their business or directly linked to their work does not fall within the scope of co-consumptionand therefore is not exempted. Income derived by a taxpayer from the rental of an element of his personal assets such as, for example, the rental of his passenger vehicle or rental, seasonal or otherwise, of his main or secondary residence does not benefit from this exemption. 2 nd condition: nature and amount of the expenses The income realised by an individual for cost-sharing which may benefit from the exemption is income, which does not exceed the amount of the direct costs incurred on the occasion of the service which is the subject of the cost-sharing, not including the taxpayers share . This condition relating to the amount received must be assessed strictly: the amount received must cover only the expenses incurred upon providing the service, excluding all costs not directly attributable to the service in question , in particular the costs related to the acquisition, maintenance or the personal use of the propert or tools used for the shared service. In addition, shared expenses must not include the share of the person who offers the service . Indeed, the concepts of cost-sharing and co-consumptionassume that this person personally bears his own share of the expenses and receives no form of direct or indirect remuneration , for the service that he provides and from which he benefits at the same time. In other words, the taxpayer who offers a service for which he shares the expenses is counted as a person in calculating the shared expenses. When the realised income exceeds the amount of the shared costs, it is taxable from the first euro. Source: Bulletin officiel des finances publiques (BOFiP), BOI-IR-BASE-10-10-10-10-20160830 |
Among the activities that can benefit from the exemption, the tax instruction cites three examples: car sharing, sea excursions, and the organisation of shared meals (or co-cooking).
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Sharing expenses: three examples Car sharing has its own legislative basis: under the terms of Article L. 3132-1 of the Transport Code, car sharing is distinguished from taxi and private hire driver activities in that it consists of the joint use of a motor vehicle by a driver and one or more passengers, carried out on a non-financial basis, except for a sharing of the costs, for a journey that the driver makes for himself . The proposed price must therefore cover only the costs directly incurred because of the shared journey, i.e. the fuel and tolls, but not, for example, a contribution to the car insurance . As a practical rule, the tax instruction specifies that the taxpayer may use the kilometric allowance to assess the total cost of his activity, rules established by Blablacar (see below). With regard to sea excursions , offered for example by sites like Boaterfly , the law states that the requested participation must be only for the costs directly incurred for the excursion, i.e. the costs of fuel, food, mooring and remuneration of the staff on board during the said excursion ” . By analogy, these rules are applied to plane sharingactivities , offered for example by the Wingly platform. They are also set out very clearly on the website page dedicated to the plane sharing etiquette: exceeding the expenses-sharing pro-rata means not only breaching Wingly s code of ethics but above all results in creating a risk. Indeed, any flight not subject to pro-rata cost-sharing then becomes a commercial flight. The pilot is then no longer protected by his insurance in the event of a plane problem. In order to ensure your safety and the long-term continuation of plane sharing, observation of this rule is essential . In its Decision of 22 August 2016 18 ( * ) authorising plane sharing in France, the General Civil Aviation Directorate (DGAC) specifies that pilots are permitted to share their flights with passengers provided they do not make a profit and pay their own share of the flight. Finally, with regard to co-cooking , offered for example by the VizEat website, the exemption applies to a private individual who organises in his home a meal for which he shares only the food and drink costs with the guests and for which he receives no other remuneration. Therefore, for example, requesting participation for the purchase of kitchen equipment is excluded . Similarly, take-away meals prepared by private individuals, as on the Belgian platform MenuNextDoor , are excluded. Source: tax instruction of 30 August 2016 and Finance Committee of the Senate |
Although the clarification made by the tax instruction of 30 August 2016 must be welcomed, its actual effect must not be overestimated which is hardly surprising, with regard to a doctrinal text written without changing the law.
In fact, the definition of cost-sharingremains extremely narrow, and leaves aside a significant part of the collaborative economy, including when users do not make any profit and try simply to reduce their expenses. In particular, it does not cover the rental of housing or movable property for example a car on Ouicar or a drill on Zilok where their owners only try to cover the cost of their purchase. In the course of its lifetime, a drill is on average only used for 12 minutes : sharing such an unused good, although relevant economically and ecologically, is not with regard to taxation considered as cost-sharing : it is taxable from the first euro, and subject to social levies of 15.5% on income from assets.
This is also true for a private individual who hires out his car to cover his expenses (depreciation, insurance etc.), and even though a car is on average used for only 2.7% of the time , and when it is used, three out of four times it is by the driver alone in the vehicle.
Likewise, a private individual preparing meals in his home for other private individuals cannot benefit from the measure if they only collect the meals from his home, without eating them on the spot.
In addition, even for those activities meeting the two conditions needed to qualify for cost-sharing, it is not always easy to define exactly what the participation of each person can or cannot cover .
However, once it involves an activity that is carried out frequently or one that is relatively expensive, such as boat or plane sharing, the amount of money at stake becomes significant, the supporting documents requested are more precise, and the risks of being subject to a tax adjustment increase including when the taxpayer acts in good faith.
In conclusion, it appears therefore that as regards taxation, the choice to preserve the framework of the existing law does not solve the problem posed by the growth of exchanges between private individuals on the Internet . The taxable nature or otherwise of income is determined on a case-by-case analysis, on the basis of complex doctrine and case-law designed for a world of physicaloccasional exchanges. While the digital transformation has greatly increased these exchanges and made most transactions traceable from the first euro, this ambiguity is no longer possible: for the legal certainty of both the users and the platforms, a clear rule, if possible at the legislative level, is necessary .
* 18 Decision of 22 August 2016 regarding the operational instruction relating to plane sharing operations organised through an Internet platform or any other means of advertising and taken in application of Article 14 of Regulation (EC) No 216/2008.