The Programme Act of 1 July 2016 introduced a new tax and social status for services provided within the framework of the sharing economy (see Eubelius Spotlights September 2016) . Until recently, this status could not be applied, due to the fact that the conditions for recognition of the electronic platforms had not yet been decided upon. A Royal Decree of 12 January 2017, which entered into force on 24 January 2017, has resolved this issue. As a result, a complete legal framework for the tax and social status is now in place, determining the conditions under which services can be provided within the sharing economy.
Context
Upon fulfilment of certain conditions, the specific tax and social status for the sharing economy ("specific status for the sharing economy") gives rise to classification and taxation of the revenues generated from services provided within the sharing economy as "diverse revenues", as well as exclusion of the service provider from the field of application of the social security scheme for the self-employed. Although this status formally came into effect on 1 July 2016, it could not be applied in practice until recently. Article 90, paragraph 1, 1°bis of the Income Tax Code – which determines the conditions for application of the specific status for the sharing economy – stipulates, amongst other things, that (1) the services must be provided exclusively through a recognised electronic platform or an electronic platform organised by the government and (2) this electronic platform must pay or grant or at least intervene in the payment or grant of the service fee. Until recently, the conditions under which a platform could obtain recognition had not been determined, thus rendering the specific status for the sharing economy practically inapplicable.
Recognition conditions for electronic platforms
The conditions and the procedure for electronic platforms to obtain the necessary recognition in the framework of the specific status for the sharing economy were set by a Royal Decree of 12 January 2017 (Royal Decree on the implementation of article 90, paragraph 2 of the Income Tax Code 1992, on the conditions for recognition of electronic platforms within the sharing economy and the subjection of the revenues mentioned in article 90, paragraph 1, 1°bis of the Income Tax Code 1992 to income tax, "Royal Decree of 12 January 2017").
The Royal Decree of 12 January 2017 added new provisions to the Royal Decree of 27 August 1993 concerning the implementation of the Income Tax Code 1992 ("Royal Decree on the Income Tax Code 1992") which determine the conditions for recognition of electronic platforms.
First, the platforms must cumulatively fulfil the following four conditions:
- the platform has been set up within a company or a non-profit organisation which has been established in accordance with the legislation of an EEA Member State or the legislation of another state with which Belgium has entered into an international agreement on equal treatment of its companies;
- the company or non-profit organisation has its registered office, main establishment or seat of management or administration in an EEA Member State or a state with which Belgium has entered into an international agreement;
- the company or non-profit organisation is, for the purpose of this activity, registered in the Crossroads Bank for Enterprises as a commercial concern or craft undertaking, or registered in a trade register in accordance with the legislation of the EEA Member State of establishment or the state of establishment with which Belgium has entered into an international agreement on equal treatment of its companies; and
- the company or non-profit organisation has a company number assigned to it by the Crossroads Bank for Enterprises which serves as a VAT identification number and contains the letters BE, or (the in absence thereof) has an identification number for VAT purposes within the EEA Member State of establishment or the state of establishment with which Belgium has entered into an international agreement on equal treatment of its companies, insofar as such an identification number exists in the applicable national legislation.
In addition, the directors, managers and those authorised to commit the company or non-profit organisation must fulfil the following conditions:
- not prohibited from exercising such functions in accordance with Royal Decree no. 22 of 24 October 1934 or similar provisions in the legislation of another EEA Member State; and
- not bankrupt, except in the case of excusability or rehabilitation, and not subject to a proceeding concerning the declaration of bankruptcy or an analogous procedure of foreign legislation.
If these conditions are met, the electronic platform can submit an application to obtain recognition following a specific procedure. The application must be sent to the chairman of the Federal Public Service Finance by letter or e-mail or must be submitted through the electronic form available on the website of the Federal Public Service Finance. The application must be accompanied by supporting documents, confirming fulfilment of the conditions for recognition. The application must be signed by the legal or official representative of the company or non-profit organisation.
Eight electronic platforms have been recognised by royal decree since the entry into force of the Royal Decree of 12 January 2017 on 24 January 2017. A list of the recognised platforms is available on the website of the Federal Public Service Finance.
Tax obligations
Finally, it is important to note that the Royal Decree of 12 January 2017 requires the company or non-profit organisation within which an electronic platform has been set up to withhold income tax on the profits and gains generated within the sharing economy and to complete certain tax forms.