Sharing economy, i.e. share and pay the tax!

According to an English survey, in 2013 the sharing economy sector produced USD 13 billion while the traditional renting sector generated USD 240 billion. Calculations suggest that by 2025 the figures will be even and both sectors will be able to produce approximately USD 335 billion, meaning that the emerging sharing economy will become a full-fledged competitor of the “establishment”.

The above mentioned survey differentiates five major sectors within the sharing economy, crowdfunding (community financing),online staffing (community staffing and other HR services),Airbnb and other similar community accommodation services (sharing accommodation),UBER and similar community passenger transport services (car-sharing) and music, video and other file sharing (TV/music/video streaming). New elements will most likely be added to this list in the future and a time may come when anything that is divisible physically or intellectually will be covered by this form of activity.

The above figures and ratios are, of course, only estimates and the forecasts are not certain to turn out this way in reality, however, it already seems certain at this point that the sharing economy will be such a dominant part of our lives that perhaps all households will be providers or users, or perhaps both, of some kind of service.

As today not even government decision makers can afford to disregard the effects of the sharing economy, regulation has become inevitable to prevent emerging clashes of tension from causing deeper social damage.

In order for this market to become more accepted it is important that, subject to proper transformation of the regulations relating to the specific industry, all players of the sharing economy take their share of public burdens also, i.e. the new sectors must also pull their weight.

For the formulated expectations to be fulfilled, the willingness of participants of the sharing economy to pay taxes would have to be changed, improved without narrowing down the room for traditional market players. Going against global trend, however, cannot be successful in the long run.

In the Hungarian legal system, the tax regime apparently meets the requirement of not putting additional obstacles in front of the participants of the sharing economy. On the other hand, it does not give those choosing this form of enterprise any more support than other players either. In this regard, it is neutral. The real problem is with other legal requirements, specifically the obligation of setting up some form of enterprise, meaning that private individuals are unable to flexibly start a business with their own assets and they are unwilling to give up the personal property nature of the assets involved in the business.

In February 2016, an information was published on the website of the Hungarian Tax and Customs Authority specifically for UBER drivers presenting in detail and in an manner easy to understand even for new entrepreneurs all methods and possibilities of taxation. The items listed in this information are not tax rules elaborated specifically for UBER drivers; all other entrepreneurs may use these tax methods.

This is another sign that, at the moment, both legislation and the tax authority’s application of law believe that the Hungarian tax regime meets the requirements relating to the taxation and the imposing of taxes on sharing economy activities and the sharing economy as an economic segment is not (and cannot be) a white (untaxed) patch.

However, beneath the surface we feel that this calmness is unreal as the sharing economy will shake up various economic sectors of, above all, the western, developed region to their very foundation and will have an impact not only on traditional economic forms but also on employment as the original function of a number of current jobs may change and new jobs may be created also.