Circular letter on the taxation regime of the sharing economy: impact of the decision of the Constitutional Court
On June 25, 2020, the Belgian Tax Administration issued a circular letter on the impact of the decision of the Constitutional Court in relation to the tax treatment of income from the sharing economy. As discussed in our News flash of 24 April 2020, this tax regime was annulled by the Constitutional Court, after being considered discriminatory.
Services rendered until the date of 31 December 2020
Although annulled, the beneficial tax regime, put in place by the Law of July 18, 2018 and the Law of October 30, 2018, will be maintained for services rendered through the sharing economy until the 31st of December 2020. This will also be the case if the income (related to these services) is paid or attributed to the taxpayer after the 31 December 2020.
For the full income (i.e the income from the services and potentially the income from the letting of movable and immovable property associated with this service), the same principles apply as during income year 2019, notably a tax exemption (and exemption of social security contributions) if the conditions for the sharing economy are respected and the income falls within:
- The annual limit of EUR 6.250 (for income year 2019) and EUR 6.340 (for income year 2020);
- The additional monthly limit of EUR 520,83 (for income year 2019) and EUR 528,33 (for income year 2020) for services arising from work for clubs, societies or associations and occasional services between citizens.
Services rendered from 1 January 2021
As from January 1, 2021, the categories of services from community work and income from occasional services are effectively abolished. Income from these services will then be considered as miscellaneous income or professional income, depending on the factual circumstances (such as the recurrent nature of these services). As a result, the favourable tax regime of the sharing economy will then only be applicable for services rendered through a recognised electronic platform.
The services rendered through such a recognised electronic platform will be taxed at a separate tax rate of 20%, whereby it is important to note that:
- The existing recognised platforms (i.e before the annulment by the Constitutional court) will maintain their recognition;
- Only the income derived from the services will benefit from the specific tax regime. In the absence of a contractual split-up of the income, the income received as a result of “the services (within the scope of the sharing economy)”, is estimated at 20%. The remaining 80% of the income, stemming inter alia from immovable or movable property connected with the aforementioned service, will be taxed according to the normal tax rules applicable to this income.
- The deduction of a fixed expense allowance of 50% has been abolished.
In the absence of further regulatory changes, the remuneration derived from the sharing economy will (as of January 2021) not become subject to “withholding tax”. However, the recognised electronic platforms will still be required to draft an annual tax form 281.29 (mentioning the income paid to the individual private service provider, increased with any amounts withheld by the platform), but without having to withhold a withholding tax at source.