The sharing economy’s fiscal reduction scheme: overview of the rules

The foundations of the sharing economy’s tax system were laid in 2016: income that is generated by one private person for another enjoys a fiscal reduction scheme as long as it takes place through intermediation of an online platform and provided certain conditions are met. Recently, the conditions that the online platforms are required to meet have been set forth clearly, as well as the withholding of withholding tax and the drawing up of an annual information sheet. We have created an overview of the rules for you.

Income from the sharing economy and the specific tax system

Income from the sharing economy comprises income from services that a private person provides to another private person, provided the following conditions are met:

• The private persons must act outside the course of their business;
• The services are exclusively performed within the framework of agreements that have been established through the intermediary of an electronic platform that has been recognised or organised by a public authority;
• The compensations are only paid to the service provider through this platform or through intermediation thereof.

Up to a limit of €5,100 (indexed amount for 2017), income from the sharing economy is taxed according to a rate of 20%, after application of 50% in fixed professional expenses. If this limit is exceeded, the entire income is considered normal professional income, unless evidence is provided to prove otherwise.

More information about the sharing economy and the specific tax system can be found in our Infoflash of 28 September 2016.

Conditions for recognition of platform and procedure

In order to obtain recognition, the electronic platform must meet the following conditions:

• The platform must be arranged within a company or non-profit organisation that has been established in accordance with the regulations of an EEA member state or the law of a state with which Belgium has entered into an agreement to treat its companies the same as Belgian companies;
• the company or non-profit organisation must:

- be located in an EEA member state or a state as described above, with which Belgium has entered into an agreement;

- or be registered in Belgium in the Belgian Crossroad Bank for Enterprises as a trade or craft undertaking, or be registered at the trade register according to the requirements of the country where the company or non-profit organisation is located;

- have a identification number for VAT purposes.

• The persons authorised for the company or non-profit organisation must meet conditions regarding their professional capability.

The application for recognition of the electronic platform is either submitted by letter or email, or through an electronic form that will be made available on the website of the FPS Finance. Various documents must be enclosed with the application (e.g. copy of deed of incorporation, copy of trade register registration, etc.).

The list of recognised platforms will be updated on the website of the FPS Finance.

Withholding tax

The electronic platform must withhold withholding tax from the compensations that it pays out, and transfer it to the FPS Finance.

The withholding tax amounts to 10% of the gross amount. This gross amount is structured as follows:

• The amount that has actually been paid out by the platform or through intermediation of the platform, or has been allocated to the private person who has provided the service;
• In addition, the following sums that have been withheld by the platform or through intermediation of the platform:

- costs (commissions) that are charged by the platform or by a financial intermediary from the service provider;

- taxes, if any (tourism tax or otherwise), withheld by the platform;

- withholding tax that has been withheld.

If one lump-sum compensation is demanded for the sharing economy services and the rental of immovable and movable assets, the withholding tax amounts to 2% of the gross amount. This only applies to the extent that no separate price was determined for the sharing economy services in the agreement.

Annual information sheets

Every platform must draw up an information sheet annually, which it submits to the tax authority and the service provider by 28 February of the year following the income year. On that sheet, among other things the identity of the service provider, a description of the service performance, the amount of the compensations and the amount of the withholding tax must be stated.

Entry into force

The conditions for recognition of the electronic platforms apply as of 24 January 2017. The regulations regarding withholding tax are applied to income paid as of 1 March 2017.

Sources: Royal Decree of 12 January 2017 determining the withholding tax on income as intended in article 90, section 1, 1°bis of the Income Tax Code 1992 (1), Belgian Official Gazette of 20 January 2017; Royal Decree of 12 January 2017 in execution of article 90, section 2 of the Income Tax Code of 1992 concerning the conditions of recognition of electronic platforms of the sharing economy and to subject income as stated in article 90, section 1, 1°bis of the Income Tax Code of 1992 to withholding tax (1) Belgian Official Gazette of 24 January 2017.

Author: Peggy Criel

16/02/2017