2016 has seen various positive initiatives from the European Institutions in support of the Collaborative Economy. After all, it is predicted to generate £230 billion a year in a decade, and already brings Europeans better ways to enjoy good and services and generate income. However, a fragmented and at times prohibitive regulatory environment persists. Some countries are simply doing nothing to remove regulatory barriers and support this new economic opportunity, whilst others are actively trying to prevent the development of competitive Collaborative Economy services.

In June, the European Commission published the highly anticipated Communication “a European agenda for the Collaborative Economy”. The Commission makes two essential points, firstly that existing EU laws already apply to the Collaborative Economy, specifically highlighting market access requirements, consumer protection, labour law, sector specific regulation and tax. Secondly, the  Communication states that Member States shall not allow unjustified and disproportionate obstacles to market access. This is very welcome news for all involved: consumers, participants and platforms. With legal certainty, trust in the sector grows and so does economic activity.

The Council of Ministers, which represents the national governments in Brussels, has discussed the sharing economy at the Competitiveness Council 3 times this year. They have made positive, if cautious, statements about the Collaborative Economy, such as “[there is a] common belief that Collaborative Economy has a potential for generating new jobs and enhancing growth.”

But what is the experience on the ground? Some countries have embraced the Collaborative Economy and led the charge to embrace change for the betterment of their citizens. For example:

  • In February, Estonia’s Tax and Customs Board has become the first in the world to establish in cooperation with Uber an option for participants to declare their income from Uber automatically. The system will be rolled out across the collaborative economy.
  • In October, Lithuania passed amendments to the Road Transport Act legally formalising ridesharing services such Uber and Taxify to operate with legal certainty
  • In March, the UK introduced groundbreaking tax reform and as of April 2017, individuals with property related or trading income will not need to pay tax on the first £1,000 they earn from each source per year.
  • In June, Airbnb simplified Tourist tax collection processes across a further 19 cities in France bringing a welcome boost to home sharing. The country has been on the path to reform since it passed legislation allowing platforms to collect tourist tax directly; rather than requiring hosts to collect taxes from each guest individually and send to city hall.

However, there are more worst-practices than best-practices when it comes to national regulations and companies are getting fed-up. It has become so bad that several formal complaints about national breaches of European law have been filed with the European Commission. Examples include: from the European Holiday Home Association, Uber and BlablaCar. In theory, the Commission has 12 months to review a complaint, but in practice, it can take much longer. To date these complaints have gone nowhere. It takes strong political will from the very top of the Commission, with the full college of Commissioners required to back a decision to begin infringement proceedings against a Member State.

However, there are those in the Commission fighting the good fight. Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, recently said:

  • “We are dealing with several legal complaints from stakeholders. I am committed to act shortly.”
  • “We are still discussing it internally, but I will do my best to do this [begin proceedings] as soon as possible.”

We should also highlight support from other European Institutions:

  • In January the European Parliament adopted a report welcoming the increased competition and consumer choice brought by the Collaborative Economy whilst urging the Commission and member states to support further development by identifying artificial barriers and relevant legislation hindering its growth.
  • In October the European Parliament’s Transport and Tourism Committee adopted a report stating that Member State’s fragmented response to collaborative business models does not reflect the potential benefits for the sector or consumer expectations. Regulation should not be sector-specific or aimed solely at platforms.
  • This month, the Committee of Regions adopted Benedetta Brighenti’s opinion, “collaborative economy and online platforms: a shared view of cities and regions” – setting out a broad policy framework for dealing with the social and civic impact of the Sharing Economy.
  • We are anticipating  Nicola Danti’s special report for the European parliament, to set an agenda for new regulatory models.

What can the EU Institutions do in 2017 to further the Collaborative Economy?

The European Commission is the key actor here. No new regulation is required to passed by the Council or Parliament, but the Commission can take steps to enforce existing regulation.

Through the Communication, the Commission has clearly expressed the regulatory framework for the provision of Collaborative Economy services. In addition, the Commission gives support to the Member States to use existing legislation such as the e-commerce directive, services directive, and consumer protection legislation, to be implemented correctly.

The European Commission must deliver on its obligations and begin infringement proceedings against Member States where their national laws and regulations contravene European Law. This is likely to be the fastest way to remove some existing barriers, educate other Member States on what is in line with existing EU laws and promote legal certainty for Europeans who want see the huge potential benefits of the Collaborative Economy realised.

By Luc Delany, Chairperson, EUCoLab 8 December 2016