Ministry of Finance spotlight on all “collaborative platforms”

On 20th December 2017, the State Council unanimously issued an Opinion (ES) on the former bill of Royal Decree 1070/2017, that amended certain tax regulations, which was approved on 29th December, and that is known, within the field of the collaborative economy, for having imposed the obligation to report an enormous quantity of – necessary and proportionate? – data on what are generically called “collaborative platforms”, regarding assignment of use of homes for the purposes of tourism.

 We have already considered these Regulations in sundry posts, a first one in August, when it was published as a bill, and a second one, at the beginning of 2018, after the bill was finally approved by the Council of Ministers on 29th December 2017.

However, we believe that this Opinion by the Council of State, prior to its regulatory approval, does indeed deserve a separate post because, as we shall see throughout this post, it has the vocation of having a great effect on all platforms (whether they are more or less collaborative in nature, in the strict juridical sense, pursuant to the latest relevant judicial resolutions).

There are four main aspects we shall emphasise in this Opinion by the Council of State:

  1. The necessary authorisation to be able to request such personal data
  2.  The scope of the data affected by such obligation to provide information.
  3.  Extending the obligation to provide information to other collaborative platforms.
  4.  Proposed across the board regulation of the collaborative economy

1. AUTHORISATION

In order to evaluate the necessary authorisation for the obligation for “collaborative platforms” to provide information, the Council of State has taken alignment with the Ministry of Finance and considers that the regulatory status is sufficient, without a rule with the rank follow law being necessary to impose that obligation.

Thus, it is only attending to the tax nature of the obligation  and, moreover, the Council of State is ignoring the fact that what is being demanded is personal data (linked to real natural persons) and that the data protection act requires a regulation of legal rank in order for platforms to be able to desist – pursuant to the law – from their duty of secrecy, pursuant to Article 10 of the Organic Act on Data Protection, with regard to such personal data.

2. SCOPE

With regard to the scope of data to be requested from platforms, what is missing is analysis based on proper grounds by the Council of State regarding the need and proportionality of the obligation to provide information thereon.

We must remember that the final text given to this RD 1070/2017, in new Article 54.ter of Royal Decree 1065/2007, requires all the following information on “collaborative platforms”.

Article 54.ter of RD 1065/2007.

4. The informative information shall contain the following data:

a) Identification of the owner of the home assigned for tourist purposes, as well as the holder of the right by which the home is assigned for tourist purposes, if different.

The identification shall be performed by name and surname or company name, or full name, and tax identification number, or under the terms of the Ministerial Order that approves the relevant declaration form.

To these ends, the holders of the right subject to assignment shall be considered those holding legal rights to the property, multi-property contracts, time sharing or similar formulas, lease or subletting, or any other right to use and enjoyment of homes assigned for tourism purposes, that are the ultimate assignors of use of the home stated.

b) Identification of the property, specifying the cadastral reference number, or under the terms of the Ministerial Order that approves the relevant declaration form.

c) Identification of the persons or entities assigning, as well as the number of days the home is used for tourism purposes.

The identification shall be made by name and surname, or company name, or full name, and tax identification name, or under the terms of the Ministerial Order that approves the relevant declaration model.

To these ends, the parties assigning use of the home for tourism purposes must keep a copy of the identification documents of the persons benefiting from the service stated above.

d) Amount received by the holder assigning use of the home for tourism purposes or, where appropriate, state that it is free of charge.

5. The Ministerial Order that approves the relevant declaration form shall establish a term for presentation and shall contain the information stated in the preceding section, as well as any other relevant data for the purposes of specifying such information”.

Is all that information really necessary?

Is it really proportional for the intended purpose?

Is it justified, even with the – clear – risk of breach of the two requisites the European Commission establishes for that purpose (such as that we already discussed in our previous post)? That is, compliance with: 1/ the exemption of liability of Directive 2000/31/EC on Information Society and Electronic Commerce Services and 2/ the data protection laws. We mention these briefly below:

In its conclusions, the European Commission called on the Member States to (1) facilitate and improve tax collection by using the possibilities provided by collaborative platforms. And in that sense it stated that collaborative platforms should adopt a proactive attitude in cooperation with efforts by tax authorities to establish the parameters for information exchange regarding tax obligations while – and here it set two essential conditions – (i) guaranteeing compliance with the legislation on personal data protection and (ii) without prejudice to the liability regime of intermediaries established in the directive on electronic commerce. It also invited the Member States to (2) evaluate their tax regulations to create equitable competitive conditions for the companies providing the same services and, (3) also continue their efforts at simplification, increasing transparency and publishing orientations in line with application of the tax regulations to collaborative enterprise models.

Now, instead of justifying the need and proportionality of the obligation to provide the information concerned, the Council of State does as it sees fit and aligns itself with the Ministry of Finance, with the need to demand the cadastral reference “to make sure the real estate marketed for such use is really offered by persons or companies that are their legitimate owners”. That is all.

3. FUTURE SCOPE FOR THE REST OF PLATFORMS

However, if there is a point that is striking in this Opinion by the Council of State it is the following one: how, while recognising that the question forming the object of finding is limited to Homes for Tourism Use (HTU) and thus platforms that are intermediaries in assignment of their use, it ends by extending the future scope of the obligation to provide tax information to the “rest of collaborative platforms, such as those providing, for example, intermediation in shared use of vehicles, or purchase of second hand articles”, as such.

The Council of State considers, precisely as the article is written, and even though it does not specifically recognise such, that the obligation to provide information recorded in the new Article 54 ter is especially aimed at collaborative platforms within the scope of assignment of homes for tourism purposes, as it specifically excludes their application to homes that have traditionally been considered for tourism (tourist accommodation pursuant to specific laws, leases defined pursuant to Act 29/1994, of 24th November, on Urban Tenancy, etc.) and specifically mentions collaborative platforms. Such platforms constitute an especially relevant phenomenon that has recently appeared, so with regard to tax fraud, there is a positive appraisal of obligations to provide information in that scope.

However, having established the foregoing, the Council of State considers it necessary to establish that, as there are collaborative platforms in other financial sectors that raise the same problems in tax terms as the collaborative platforms affected by the new Article 54 ter of the RGAT (General Tax Inspection Regulations), it would be convenient to extent, as far as possible and with the specialities required by the characteristics of each one, for example intermediation regarding shared use of vehicles, or purchase of second hand articles. In that sense, one must emphasise that it would not be justified to impose obligations to provide tax level information on some collaborative platforms and not on others.

That is, that the scope of the Opinion be limited to Housing but, while they are at it, for the rest of the “collaborative” platforms to get ready.

Thus, instead of fulfilling the recommendations by the European Commission in its Communication of 2nd June 2016, in the sense of the Member States handing down directives to guide the citizens: (i) the Ministry of Finance “bombards” the “collaborative platforms” by demanding the personal data of their users (that pursuant to Directive 2000/31/EC on Information Society Services and electronic trade, they should not monitor and, moreover, obtain knowledge of) and (ii) the Council of State – indeed – goes even further than the Ministry, and warns the rest of the platforms that they should get ready to suffer the same fate.

That is pure “When your neighbour’s house is on fire, your home is in danger” style. In juridical terms, this is an extremely severe matter, due to the lack of juridical-economic grounds to the scope creep involved.

4. FUTURE REGULATION OF THE COLLABORATIVE ECONOMY

Lastly, one must also emphasise how the Council of State calls for across the board regulation of the collaborative economy, “taking into account the multiple implications the collaborative economy has at all legal, economic, political and social levels.”

Lastly, the Council of State deems it necessary to emphasise it would be convenient to set about regulation of collaborative platforms and the collaborative economy as soon as possible. It considers it is urgent to establish the juridical principles to govern such new realities and to provide judicial security to a sector of the economy that has undergone exponential growth in recent years. The perspective such regulation adopts must be comprehensive in all cases, taking into account the multiple implications the collaborative economy has at all levels: legal, economic, political and social.

What is indeed striking, to say the least, is the reference to juridical security, when this is guaranteed – in our humble opinion – not by more regulation, but by efficient regulation based on the principles of need and proportionality, as the Department for Promotion of Competition at the CNMC insists on defending.

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Rosa Guirado

Lawyer & Economist .Founder of Legal Sharing
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