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The Regulatory Framework of the Collaborative Economy in Central and Eastern Europe

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The Regulatory Framework of the Collaborative Economy in Central and Eastern Europe COMPARATIVE STUDY THE REGULATORY FRAMEWORK OF THE COLLABORATIVE EcONOMY IN CENtrAL AND EASTERN EUROPE AUTHORS: Primož Mikolič, Ivo Grlica, Pavel Peterka & Robert Chovanculiak PRIMOž MIKOLIč Primož Mikolič is an adjunct fellow at the Visio Institute and an Associate at ODI Law Firm, both based in Ljubljana, Slovenia. He works primarily in the field of corporate and insolvency law. His area of expertise extends to legal analysis of innovative business models, including regulatory challenges of collaborative economy. Primož is a member of Slovenian Bar Association. IVO GRLICA Ivo Grlica is an adjunct fellow at the Visio Institute and a Senior Associate at ODI Law Firm, both based in Ljubljana, Slovenia. His area of expertise is international and European tax law, in particular tax issues of e-commerce. He is also involved in research of legal and tax challenges of the collaborative economy, cryptocurrencies and distributed ledger (blockchain) technologies. PAVEL PETERKA Pavel Peterka is a graduate of University of Economics in Prague and his research is related to economics of regulation and support of innovation in various areas. As a liberal economist he is promoting free market and private solutions to economic problems. ROBERT CHOVANCULIAK Róbert Chovanculiak has been Economic Analyst at the Institute of Economic and Social Studies (INESS) since 2015. He holds a Ph.D. degree in public economics at the Faculty of Economics of the Matej Bel University, Slovakia. He worked as Analyst for the Slovak Business Agency prior to joining INESS. His field of professional interest is public finance, economic policy, new Internet technologies, and education. THE REGULATORY FRAMEWORK OF THE COLLABORATIVE ECONOMY IN CENTRAL AND EASTERN EUROPE 03 Table of contents Executive Summary 03 1. On the Collaborative Economy 04 1.1 Opportunities and Challenges 05 1.2 European Commission’s Agenda for Collaborative Economy 06 2. Country Reports 09 2.1 Slovenia 09 2.1.1 Market Access Requirements 09 2.1.2 Consumer Protection 11 2.1.3 Employment 12 2.1.4 Taxation 13 2.2 Croatia 13 2.2.1 Market Access Requirements 14 2.2.2 Consumer Protection 15 2.2.3 Employment 16 2.2.4 Taxation 17 2.3 The Czech Republic 18 2.3.1 Market Access Requirements 19 2.3.2 Consumer Protection 20 2.3.3 Employment 20 2.3.4 Taxation 21 2.4 Slovakia 22 2.4.1 Market Access Requirements 22 2.4.2 Consumer Protection 22 2.4.3 Employment 23 2.4.4 Taxation 23 3. Summary 25 Executive Summary In June 2016, the European Commission (EC) issued the European Agenda for the Collaborative Economy. This paper evaluates the status of most of the regulatory areas of the collaborative economy covered by the European Agenda (market ac- cess requirements, consumer protection, employment, and taxation) in four EU member countries (Slovenia, Croatia, the Czech Republic, and Slovakia) which were not included in the EC document. Further, this paper compares the regulatory envi- ronment in these countries with the objectives and aims outlined in the European Agenda. Along with innovative examples of the collaborative economy in these four countries, attention is devoted to the areas where there is room for improve- ment. The regulatory frameworks analysed in this paper may inspire a transition to better regulatory environments for the collaborative economy in other countries around the world. 04 COMPARATIVE STUDY 1. On the Collaborative Economy he collaborative economy is a socio- economy pioneers, Airbnb seems to be increasingly economic phenomenon that has gained flooded by major hotel chains and professional rental worldwide attention with rapid growth in services, while Uber – especially in new markets – is recent years. It may be defined as an eco- increasingly cooperating with established taxi firms.4 Tnomic model “where commonly available technologies enable people to get what they need Therefore, the potential of the collaborative economy from each other”.1 The collaborative economy encom- lies in integrating crowds empowered by online tech- passes business models whereby online collaborative nologies into established businesses. By adopting platforms create “an open marketplace for the tem- such innovative business models, established busi- porary usage of goods or services,” pointing out that nesses are starting to revolutionise traditional busi- the latter are “often provided by private individuals, ness processes and capitalise on the vast possibili- offering services on an occasional basis (known as ties of the online infrastructure for the provision of »peers«)”.2 traditional (i.e. non-electronic) goods and services. In other words, the collaborative economy has in The online collaborative platform acts as an interme- a way enabled the “digitalisation” of service provision diary between professional or occasional (“peers”) in nearly all business sectors, which has allowed the service providers and users (See Figure 1). In addi- collaborative economy to spread from transportation tion, collaborative platforms may offer services (e.g. (Uber) and accommodation (Airbnb) to areas such as payment services, insurance, identity verification, food (Uber Eats5, Saucey6), health (Cohealo7, Doctor handling complaints, or similar) through third par- on Demand8), wellness & beauty (Swipecast9, Kindly ties, such as banks, payment processors, or insurance Care10) and finance (Crowdfunder11, Kiva12). Accord- companies. Finally, the collaborative ecosystem in- ingly, the collaborative economy has proliferated all teracts with regulatory and tax authorities on various over the economy, engaging both production factors levels – the EU, national and municipal levels. (capital and labour) and delivering both market prod- ucts (goods and services).13 While the collaborative economy is a new form of Internet-powered market, the rendering of services by individuals (“peers”) through online collaborative platforms is not a defining characteristic of it. Some what-it-is/ (19.04.2017).; and G. M. Eckhardt and F. Bardhi, 2015. The Sharing Economy Isn‘t About Sharing argue that the collaborative economy does not con- at All, https://hbr.org/2015/01/the-sharing-economy- cern sharing, but is rather a market-mediated access isnt-about-sharing-at-all (19.04.2017). economy.3 Indeed, upon examining two collaborative 4 F. Celikel Esser F et al., 2016. The European Collaborative Economy: A research agenda for policy support, p. 5. 5 See https://www.ubereats.com/vienna/ (19.04.2017). 6 See https://www.saucey.com/ (19.04.2017). 7 See http://cohealo.com/ (19.042017). 1 Jeremiah Owyang, 2015. The Collaborative 8 See http://www.doctorondemand.com/ (19.04.2017). Economy Defined, http://www.web-strategist.com/ 9 blog/2015/08/27/the-collaborative-economy-defined/ See https://www.swipecast.com/ (19.04.2017). (19.04.2017). 10 See https://www.kindlycare.com/ (19.04.2017). 2 European Commission, 2016. A European agenda for the 11 See https://www.crowdfunder.com/ (19.04.2017). collaborative economy, COM(2016) 356. 12 See https://www.kiva.org/ (19.04.2017). 3 Olivier Blanchard, 2015. Stop calling it the »Sharing 13 F. Celikel Esser et al., 2016. The European Collaborative Economy.« That isn‘t what it is., http://olivierblanchard. Economy: A research agenda for policy support, p. 6; net/stop-calling-it-the-sharing-economy-that-isnt- JustPark, 2017. The Sharing Economy Index, https:// THE REGULATORY FRAMEWORK OF THE COLLABORATIVE ECONOMY IN CENTRAL AND EASTERN EUROPE 05 Figure 1: Collaborative Economy Ecosystem PROFESSIONAL OCCASIONAL SERVICE SERVICE PROVIDERS PROVIDERS (“peers”) ONLINE COLLABORATIVE PLATFORM PAYMENT PROCESSORS, REGULATORY AND INSURANCE COMPANIES, TAX AUTHORITIES AND BANKS USERS 1.1 OPPORTUNITIES AND CHALLENGES leading to an improvement in the quality of services offered by traditional providers. Thirdly, collabo- Opportunities of the collaborative economy arise rative platforms may also yield positive outcomes in many areas. Firstly, collaborative platforms pro- for the government. As most of the collaborative vide individuals with the opportunity to share their economy transactions are processed digitally and assets or time, followed by obtaining income in online, they are not only traceable but also provide a more flexible manner than through regular em- an opportunity for more effective collection of tax- ployment. Secondly, services rendered through es and other dues, provided that collaboration be- collaborative platforms create new choices for tween the authorities and platforms is ensured. For consumers and increase market competition, all example, the city of Amsterdam and Airbnb entered into an agreement, under which Airbnb collects and remits Tourist Tax on behalf of the hosts.14 In www.justpark.com/creative/sharing-economy-index/ (19.04.2017); and Jeremiah Owyang, 2016. Honeycomb 3.0: The Collaborative Economy Market Expansion, 14 I Amsterdam, 2014. Amsterdam and Airbnb sign http://www.web-strategist.com/blog/2016/03/10/ agreement on home sharing and tourist tax, http:// honeycomb-3-0-the-collaborative-economy-market- www.iamsterdam.com/en/media-centre/city-hall/ expansion-sxsw/ (19.04.2017). press-releases/2014-press-room/amsterdam-airbnb- 06 COMPARATIVE STUDY France, collaborative platforms notify users of their With collaborative platforms becoming increasingly annual income earned through the platform and, popular, it is crucial that relevant information is furthermore, notify them how and by what amount transparent and available to the public, making it to fulfil their tax obligations.15 Lastly, the collabora- possible for everyone not just to participate in and tive economy has a positive impact on society. As benefit from this new business model, but to be such, it can lead to more optimal use of resources, cognisant of potential risks. One such source of in- environmental sustainability, circular economy or formation is the European Commission’s European even strengthening of community values through Agenda for the Collaborative Economy, providing consumer-to-consumer (C2C) transactions.16 “legal guidance and policy orientation to public au- thorities, market operators and interested citizens At the same time, the collaborative economy cre- for the balanced and sustainable development of ates challenges.
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