III. REPORTING, CONTROL AND COLLECTION:
A. SELF-REGULATION: AN ENCOURAGING YET INHERENTLY LIMITED RESPONSE
1. An effort by the platforms to identify professional users
Due to their sector of activity, some online platforms are, by definition, reserved only for professional sellers or service providers . This is the case for example of some 22,000 private hire drivers and licensed passenger transport drivers, or the 42,000 qualified self-employed workers registered on Hopwork . All have a professional status (micro-entrepreneur, “ Entreprise Unipersonnelle à Responsabilité Limitée ” (EURL), “ Société par Actions Simplifiée Unipersonnelle ” (SASU) etc.), whose supporting official documents are requested by the platform.
Many platforms, however, attract both private individuals and professionals and many users situated somewhere in between the two , without it necessarily meaning that a professionalaccount on a platform implies a legal status of self-employed worker, or the reporting and payment of taxes. Similarly, asking a seller to provide his VAT or company registration number (SIRET) does not guarantee that he will actually declare it.
Of course, it must be recalled here that it is not, legally speaking, the platforms' responsibility to ultimately ensure compliance by the users with their tax obligations .
In most cases, the status of professionalremains a simple declaration . Most platforms simply do not have the human or material resources to make the necessary checks. With regard to the detection of fake private individuals, the CEO of a small platform heard by the Working Group summarised the situation like this: we often observe, we sometimes alert, but we do not remove them from the platform.
That said, identifying the vendors or providers of professional services is most often in the interest of the platforms themselves : professional accounts are often a paid-for service associated with visibility options they are even together with advertising, the base of the business model of those websites that do not take a fee on transactions. There is also an important issue of reputation for example, on Leboncoin , which is the leading real estate website in France, a seller pretending to be a private individual who later on informs the buyer that he must pay agency fees is very bad publicity for the site. Therefore, the priority of these websites is not so much the fight against tax fraud as rooting out scams targeted at users , and in this regard, the professionallabel is a significant guarantee for an economic model which above all is based on trust.
In terms of detecting fake private individuals , the measures taken by the platforms can be broken down into three unevenly implemented stages.
The first stage is to inform users of their tax and social obligations (and also where appropriate obligations specific to their sector), which most platforms have done for a long time in dedicated sections. The two examples below are taken from the sections of two platforms, A Little Market and Zilok , offering respectively "hand-made" objects and objects for rent, and therefore at the heart of the problem of distinguishing private individuals from professionals.
The second stage consists of identifying the professionals and the "fake private individuals" . For this purpose, most platforms have criteria, in most cases confidential and adopted to their economic model, used to identify these users: income or frequency thresholds of transactions, type of products or services offered, scores given by customers etc. On the main platforms, a team of moderators is entrusted with this task. Where applicable, reports by third parties (customers, competitors, etc.) are added to these.
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Information sections: two examples |
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A Little Market Although selling on the Internet as a private individual or a professional is allowed, each seller is under the obligation to report his sales to the tax authorities . As a private individual , you must report your earnings from your sales on your income tax return in the supplementary form 2042 C in the BIC non professionalcategory. If you wish to obtain more information or help to complete your income tax return (), call 08 or visit the General directorate of public finances website. As a professional , you simply need to report your sales when filling in your income tax return as for the rest of your commercial activity. If you are unsure of something or have a question, we advise you to contact your income tax office directly or the chamber of commerce in your region, or the Union des Auto-Entrepreneurs (auto-entrepreneurs association) if this is the status that you have chosen. |
Zilok The question is not whether you must report your income but how to report your Zilok income in France in your annual income tax return. As a private individual, for the annual income tax return, we declare all our income. Zilok income is not an exemption to this logic, so you are also required to report all your Zilok income to the tax authorities. The tax authorities consider that movable property rentals are non-intellectual service. The movable property rental activity is covered by the BIC, Industrial and Commercial Profitstax system. |
The third stage consists of obliging the user to switch to professional status , typically a service that has to be paid for or that is more expensive but that offers greater guarantees to the parties.
It is also possible to close or block the accounts of fake private individualsor users exceeding certain thresholds . However, with the exception of cases where the economic and legal viability of the platform depends on it, for example in the case of activities covered by strict cost-sharing, these measures are more rarely implemented.
Finally, it cannot be excluded that some platforms voluntarily demonstrate certain complacency with respect to fake private individuals , even to the point of making them implicitly part of their sales pitch . In fact, the hearings conducted by the Working Group show that the safeguards put in place are highly variable depending on the platform.
2. The (sometimes) risky strategy of using internalcriteria: the cases of Heetch and Blablacar
The problem is that given the lack of simple and objective criteria to distinguish private individuals from professionals, or exempted income from taxable income, it is sometimes left to the platforms themselves to mark out this limit .
This issue is of great concern to platforms that bring together sellers, renters and providers of services of different categories , and was repeatedly brought up during the hearings of the Working Group by marketplaces such as Vide Dressing , A Little Market and Da Wanda , by service platforms such as Stootie and Listminut , and rental platforms such as Drivy , Boaterfly and Airbnb . In these different cases, however, a wrong classification does not in principle result in major consequences for the platform, beyond the legal uncertainty for its users.
The same cannot be said for passenger transport, where sector specific regulations can depend on -unclear- income criteria .
Indeed, like many European countries, and, with the notable exception of Estonia which has expressly legalised it (see below), France has made it illegal for private individuals to offer transportation services for passengers in return for money; except for cost-sharing purposes.
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Passenger transport and car sharing The ThévenoudAct of 1 October 2014 36 ( * ) reserved this activity to taxis and private hire drivers only . Thus, under the terms of Article L. 3143-4 of the Transport Code 37 ( * ) , organising contacts between passengers and persons who are neither public passenger road transport companies (), nor taxi operators, private hire drivers [VTC] or motorised vehicles with two or three wheels is punishable by up to two years imprisonment and a EUR 300,000 fine , for the purpose of providing an occasional passenger transport service 38 ( * ) or a passenger transport service in return for money 39 ( * ) . It was by implementing this provision that the UberPop service was suspended on 3 July 2015 and then stopped. It allowed private individuals to transport other private individuals in their personal vehicles. When it was suspended, UberPop had 10,000 registered drivers (including 4,000 active the previous week), and 500,000 regular users. The average income of UberPop drivers was EUR 8,200 per year , even though 87% of them had another job at the same time 40 ( * ) . Only the transportation of persons not in return for money, i.e. car sharing, is allowed , provided for in Article L. 3132-1 of the Transport Code and defined as 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 expenses, for a journey that the driver makes for himself . As the afore-mentioned tax instruction of 30 August 2016 confirmed (see above), the proposed price must therefore cover, only the expenses directly incurred because of the shared journey , i.e. fuel and tolls, but not, for example, a contribution to the car insurance. Source: Senate Finance Committee |
It is therefore the responsibility of transport platforms open to private individuals to lay down rules to ensure compliance with these provisions, i.e. the free-of-charge nature of the services performed by their users.
a) Blablacar: a rule based on the kilometric allowance scale, in accordance with the tax authoritiesdoctrine
Blablacar is a strict car sharing platform , i.e. transport between private individuals without remuneration, but covered by cost-sharing. In accordance with the provisions of Article L. 3132 of the Transport Code and of the tax instruction of 30 August 2016 (see above), the proposed activity must therefore meet two conditions:
- firstly, the driver must benefit from the service that he provides (co-consumption) , a condition that is always met since the driver drives his car and makes the journey offered as a car sharing service for himself;
- secondly, his income must not exceed the amount of the direct costs incurred when providing the service subject to cost-sharing, and for which he pays his own share.
In order to ensure that this condition is respected, the site has established a rule capping the contribution that the driver may request, based on the “kilometric scale” : we have therefore taken the lowest of the tax scale (EUR 0.41 per km) that we have divided by 5 (i.e. a maximum of 4 passengers plus the driver) to reach a maximum contribution to the expenses per kilometre and per passenger. You cannot technically offer more than EUR 0.082 per km and per passenger and offer more than 4 seats 41 ( * ) .
The kilometric scale (2017)
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Power for tax purposes |
Up to 5,000 km |
from 5,001 to 20,000 km |
more than 20,000 km |
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3 HP |
d x 0.41 |
(d x 0.245) + 824 |
d x 0.286 |
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4 HP |
d x 0.493 |
(d x 0.277) + 1082 |
d x 0.332 |
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5 HP |
d x 0.543 |
(d x 0.305) + 1188 |
d x 0.364 |
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6 HP |
d x 0.568 |
(d x 0.32) + 1244 |
d x 0.382 |
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7 HP and over |
d x 0.595 |
(d x 0.337) + 1288 |
d x 0.401 |
d: distance travelled.
Employees who use a vehicle for professional purposes can deduct the expenses actually incurred for them if they are able to present the necessary supporting documents.
Under the terms of 3° of Article 83 of the General Tax Code, they can, more simply, use the kilometric scale set by decision of the minister responsible for the budget. They are codified in Article 6 B of Annex IV to the General Tax Code.
As a general rule, the kilometric scale can be used for vehicles of which the employee himself or, if applicable, one of the members of the tax household, is personally the owner.
Source: Senate Finance Committee, according to the Bulletin officiel des finances publiques (BOFiP)
The tax instruction explicitly mentions the possibility, for car sharing, to use the kilometric scale : on the basis of a clear and objective rule, and moreover by retaining the most conservative scenario, Blablacar is able to guarantee its users that the costs are strictly shared.
It is not necessarily the same, for example, for plane sharingor boat sharingor co-cooking, which do not benefit from such a clear objective scale, although the platforms take care to apply strict pro rata rules in the requested contributions.
With regard to road transportation, however, it appears that alternativerules to those based on the kilometric scale do not allow the activity to be considered cost-sharing.
b) Heetch: an maximum amount of EUR 6,000 per year, with no legal basis
Heetch is a French platform which allows private individual drivers to offer a transport service to other private individuals . It presents itself as a night-time transport platform (the service works only between 10 pm and 6 am), directed at young people (80% of passengers are under 25) and makes up for a lack of commercial solutions (80% of journeys are in the suburbs).
Heetch claims that the activity offered is a non-remunerated transport service, i.e. car sharing , which meets the definition of cost-sharing. Therefore, the drivers do not need to hold a taxi or private hire driver licence.
In order to ensure that the driver does not make a profit, Heetch limits to EUR 6,000 per year the maximum income per operator , an amount equal to the annual average cost for a private individual of a city car travelling 15,000 kilometres 42 ( * ) . For information, the average income of a Heetch driver was EUR 1,750 in 2016, or EUR 35 per week, and 30% of them earned less than EUR 500: It is a sideline activity .
On 2 March 2017, Heetch and its two co-founders however were found guilty of complicity with the illegal exercise of the taxi profession, a misleading commercial practice and the illegal organisation of a system of establishing contacts between customers and non-professional drivers , the court considering that the activity exercised by the drivers could not be characterised as non-commercial transport .
In particular, the court considered that cost-sharing must be assessed with respect to a single journey and not over a year 43 ( * ) : the sharing of expenses may only legally be considered in a unitary way, journey by journey, and not annually. It appears that the price paid by the passenger is not solely compensation of the costs incurred by the driver: the latter is paid for his service and Heetch collects a commission on the price of the journey which largely exceeds the actual cost of keeping and using the vehicle .
This judgment shows the fragility of " internal”legal criteria used by the platforms to distinguish between private individuals and professionals, or between activities in return for a fee and those that are free-of-charge. In this case, of course, the consequences are particularly far-reaching because this characterisation results in a ban on the activity. But generally, these problems may arise for other actors of the collaborative economy.
In this regard, a legally-defined threshold for proceeds that can be used to assume the professional or non-professional nature of an activity , as proposed by the Working Group (see below), would confer much greater legal certainty on internalrules established by the platforms however- this is not an assumption, with regard to Heetch s activity that it would have, all things being equal, met the car sharing definition, since the EUR 6,000 upper limit was not the only element rejected by the judge 44 ( * ) .
* 36 Act No. 2014-1104 of 1 October 2014 relating to taxis and to cars with a driver.
* 37 Originally codified in Article L. 3124-13 of the Transport Code, this provision has been moved to Article L. 3143-4 of the same code by the Article 1 of the Act No. 2016-1920 of 29 December 2016 relating to regulation, accountability and simplification in the public passenger sector of private individuals, the so-called GrandguillaumeAct.
* 38 Article 3112-1 of the Transport Code.
* 39 Article 3120-1 of the Transport Code.
* 40 Interview with Thibaud Simphal, managing director of Uber France , Le Monde, 3 July 2015.
* 41 https://www.blablacar.fr/blablalife/blabla-a-bord/astuces-covoiturage/calcul-prix-trajet-covoiturage
* 42 Source: Agency of the environment and energy management (ADEME), Private vehicles sold in France , Official Guide, 2011 edition, page 26.
* 43 Paradoxically, application of the kilometric scale, as in the case of Blablacar , means that under certain conditions the amount of EUR 6,000 per year can be exceeded.
* 44 The court moreover took the view that the second condition laid down by Article L. 3132 of the Transport Code in order for an activity to be characterised as car sharing, i.e. that the driver must make the journey for himself, was not met. In fact, with Heetch , it was the passenger who decided his journey. In addition, Heetch argued that the amount paid by the passenger was not a price, since the price displayed by the application was only a suggestion