Italy to adopt first "Sharing Economy Act" in Europe -- but does it share EU law principles?

Katfriend and sharing-economy enthusiast Revital Cohen (Baker & McKenzie, Milan) tells us about what appears to be the very first attempt to provide an overall legal framework for (almost) all those disruptive business that usually go under the definition of "sharing economy". This legislative proposal comes from a country where sharing indeed matters, ie Italy, but it is not so certain whether Italians really got what sharing services among EU Member States is about. 

Here's what Revital writes:
"Sharing economy transactions have increased rapidly in recent years, reaching an estimated value of US $15b annually. Some estimates predict that sharing economy will generate more than US $300b by 2025. Numbers speak for themselves: the sharing economy is likely here to stay. 
However, some collaborative-based business models are still struggling to find proper acknowledgment in the current economic, social and - most importantly - legal scenario. Several legal key issues regarding rights and obligations of users and platforms have been raised, and just as many uncertainties remain that require consideration. 

After more than a year of negotiations and discussions, Italy is seeking to reach a compromise with a bill made public a few days ago and unofficially called the "Sharing Economy Act[officially: "Regulation on the digital platforms for the sharing of goods and services and provisions for the promotion of the sharing economy"]. The bill seems to be the first of its kind in Europe and tries to provide an overall legal framework to acknowledge and foster the sharing economy, instead of adapting existing laws to this relatively new business model. In the proposing MPs' intention, it sets forward tools aimed at guaranteeing transparency, "fair taxation" and compensation, as well as consumer protection. 
In a nutshell, these are the main features of the bill: 
·     "Sharing economy" and "sharing economy platforms" defined! – The bill provides for one of the first normative definitions of the phenomenon. "Sharing economy" is defined as an "economic system generated by the optimization and shared allocation of space, time, goods and services through digital platforms". A digital platform runs a sharing economy business (thus falling within the scope of the Sharing Economy Act) insofar as it facilitates a connection between users, even though it "may provide added value services" besides the connection itself. In order to be qualified as a sharing economy platform, users must exclusively own the assets generating value for the platform. Platforms operating as intermediaries in favour of professional operators are expressly excluded from the bill's scope of application -- which, according to some, would place services like UberBLACK out of the picture.

Classic Italian sharing 
·       The Italian Competition Authority, the Sharing Economy Registry, and the "Company's Policy Document" – The bill vests AGCM (The Italian Competition Authority) with monitoring duties over the sharing economy digital platforms' activity. And here comes the first actual illiberal burden innovation. In order to operate lawfully  in Italy, the digital platform would need to register in a new "Electronic National Register of Sharing Economy’s Digital Platforms", accessible and open to the general public. In order to access that register, platforms would need to submit a "Company's Policy Document" for AGCM's review and approval. Among other things, that Document would include platform's contractual provisions with users, which shall not contain any of the prohibited clauses listed under Article 4(2) [such as those allowing platforms to establish mandatory fixed rates or an exclusive-supply relation with users, etc]. Ironically, digital platforms would [at least partially] cover the costs that AGCM might face due to its new monitoring duties via a tax up to the 0,08% of their [likely national] turnover, to be paid to AGCM. 
·       Sanctions – Digital platforms operating without being registered in the above mentioned register would be ordered by AGCM to suspend their activity and fulfill their registration obligation. Should the platform not comply with the latter, AGCM might issue a fine which can reach 25% of the income originating from the period of activity carried out lacking registration.   
·       A (sharing) tax revolution – This is one of the main points of the bill, which tries to ensure "fair fiscal incomes" [fair to whom, wonders Merpel?] by adopting a double-track taxation for users and tailoring a brand-new role for platforms. First, the bill requires users to indicate sharing-economy incomes in their income declaration under the brand-new entry "income deriving from non-professional sharing economy activity". Annual incomes up to € 10,000 would be subject to a 10% rate, while incomes greater than € 10,000 would be subject to rate applicable to user's professional incomes. Another bill's big deal is that platforms would act as withholding agent, meaning that they would directly hold taxes due by users and forward them to State. To do so, the Bill provides that sharing-economy platforms shall have a permanent establishment in Italy. The Italian MPs who prepared the bill deem that those measures might be worth around € 150m in tasty taxes for the Italian State. 
·       Promoting sharing economy and best practices – Besides regulating and taxing, the bill also seeks to promote sharing economy on a structural basis. For this purpose, the bill generally states that the Parliament might adopt annual measures "to spread sharing economy and remove regulatory, normative, and administrative obstacles". Further, the Ministry of Economic Development would issue guidelines addressed to local entities with the purpose of encouraging the creation of new forms of collaborative-based services.   
Time to embrace sharing economy?
The proposing MPs presented the Bill to the Chamber of Deputies on 2nd March 2016 and it is just as its early stage. An online public consultation is currently being held until 31st May 2016. Afterwards, the Bill will start its parliamentary procedure, during which both Chambers could review and amend it. 
The Italian Bill appears [at least] to be a first formal acknowledgment that sharing economy deserves a tailored legal framework. Some of its provisions, though, raise serious concerns as regards their compliance with EU Law, in particular with the "Country of Origin Principle" [Article 3 of the E-Commerce Directive]. The latter provides that information society services must comply with the laws of the Member State in which they are established and prevents other Member States from "restrict[ing] the freedom to provide information society services from another Member State" by imposing further restrictions to the provider's activity, unless they are (i) justified by serious grounds, eg public policy or consumer protection, and (ii) necessary and proportionate for the sake of safeguarding those major interests.

Providing that a digital platform established, say, in Slovenia and compliant with Slovenian Law shall also comply with a number of significant obligations (eg, enrolling on the "Electronic National Register of Sharing Economy’s Digital Platforms", submitting the "Company's Policy Document" and obtaining AGCM's approval, having a permanent establishment in Italy, acting as withholding agent, etc.) in order to provide lawfully its services in Italy does not really seem in line with the "Country of Origin Principle" and with the freedom to provide information society services pursued by the E-Commerce Directive [and by EU Law in general]. Thus, significative amendments to the Bill during the Parliamentary procedure would come as no surprise.

To a certain extent, all this amounts to a good example of how the very existence of different and potentially conflicting national laws regulating sharing economy businesses could lead to an undesired fragmentation of the Single Market [one of the main purposes of which is to "remove obstacles to cross-border online services in the European Union and provide legal certainty to business and citizens in cross-border online transactions"], preventing both platforms and users from exploiting this business model's potential at its best [see, on this point, "The Cost of Non-Europe in The Sharing Economy", here]. Ultimately, a fair balance between a flexible, pro-competition environment for sharing-economy businesses and a certain and sound regulatory approach seems to require a unified [or, at least harmonised] European legal framework. This could be why sharing economy is already a priority on the EU agenda. Indeed, the European Commission is expected to publish its long-awaited guidelines on how existing EU directives [such as the E-Commerce and Service directives] should apply to collaborative business models in mid-2016. Moreover, this year the Court of Justice of the European Union will decide on the Court of Barcelona’s reference as regards the legal nature of the services offered by Uber vis-a-vis EU directives [reported by the IPKat here]. The best is yet to come, then. Stay tuned!"
Italy to adopt first "Sharing Economy Act" in Europe -- but does it share EU law principles? Italy to adopt first "Sharing Economy Act" in Europe -- but does it share EU law principles? Reviewed by Eleonora Rosati on Friday, March 11, 2016 Rating: 5

2 comments:

  1. Revital is definitely right: no way the Bill as it is could be compliant with ECD.

    ReplyDelete
  2. I'm a bit at loss when it comes to the overall negative approach to taxation in this post - joking about fairness considering the large black economy in Italy?

    Anyhow, depending on the wording of the provision (I'm not a very strong reader of Italian), requiring a branch or filial in Italy isn't necessarily too problematic in my view.

    ReplyDelete

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