Rental of goods and real state using digital platforms will be taxed at the self-employed rate in France


France has taken the initiative in the regulation of the sharing economy. Under the

Under the 2017 Social Security Financing Act, property owners that rent (i) property generating income in excess of an annual €23,000, or (ii) movable property (vehicles and boats) generating income in excess of €7,720 annually, must register as self-employed for French social security purposes (Régime Social des Indépendants, “RSI”).

These rules do not apply to co-consumption, i.e., to those who obtain income from sharing their goods with other consumers, such as sharing one’s own vehicle for a trip, unless the income obtained were to be greater than the direct costs involved.

The regulation is aimed at preventing those who rent and obtain income using IT platforms from benefitting from a tax and social security treatment that differs from that of those who obtain their income using other, more traditional means. It will also undoubtedly help ensure that those who obtain income from the new economy do not avoid making their contribution to the public systems, even if such economic activity does not constitute the main source of income of those offering the services.

From an economic analysis standpoint, this measure could have several effects: (i) those who register and pay in their social security contributions will increase state revenue; (ii) the underground economy could be given a boost, particularly in the case of those who are on the verge of exceeding the required minimum income amount threshold ; (iii) the measure could lead to the exclusion of certain users from the platforms if the income they obtain, less the new costs, ceases to be attractive; or (iv) the new regulation could further increase the cost of those rentals that are taxable, with owners passing on such costs to the user. In this latter case, it could lead to a general price increase in certain sectors, such as housing rental.

It will be necessary to await details of activity and revenue in coming months to determine which of these trends will prevail over the rest, and to see whether other countries follow France when it comes to taxing the rental of goods and real estate using the new digital platforms.