Sharing Economy in Italy: Regulations and Current Debate

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign
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Italy is one of the first countries in Europe that has the major number of users and people aware of what is the so-called “sharing economy” (it is the third country after Turkey and Spain). In the last years there have been several researches about this new issue. According to a research of Niccolò Cusano University, usually the typical Italian user is a man (in the 56% of the cases) under 44 years old (74%), who is well-educated and comes from the Northern part of the country (53%).

Size and Development of Italian Sharing Economy

This new kind of economy has become, and is becoming, more and more relevant in the Italian society. According to a study conducted by researchers from the University of Pavia, the web platforms that offer these types of services have grown by 34.7 % between the years 2014 and 2015. This study has highlighted that in 2015, sharing economy was valued around EUR 3.5 billions (which corresponds to 0.21 % of a GDP valued EUR 1,656 billions for that year), and it could grow (in the more optimistic case) up to EUR 25 billions in 2025 (which means 1.5 % of GDP).

In its “basic scenario”, the research has underlined that if we have a medium increase of GDP by 1% for each year, it could mean that this phenomenon would be valued EUR 14 billions in 2025, contributing to the country’s GDP by 0.7%. Certainly, these services could become an important part of the economy and contribute to national GDP in a remarkable way. Italian economy is in fact trying to grow faster, but with some difficulties: its GDP has grown by 0.8 % in 2015 – a value that should increase in order to allow the country to get out of the current deep crisis of the last several years.

As the research from the University of Pavia mentions, the typical users of these services are the so-called “strong users” of the Internet, who are about EUR 6.4 millions of Italian citizens that habitually use the web, and who are familiar with it. The expenses of these users for sharing economy could be calculated as 1% of the whole expenditures of the Italians.

In a positive scenario of strong growth, the sharing services users could become also people over 35-45 years old, which are currently non-familiar with the Internet and which are not aware of the benefits and the utility that these new apps can provide.

Sharing Economy Regulation in Italy

Regarding the normative framework for sharing economy, there are no specific laws that can set under control these new services, therefore this sector is still deregulated, and with no control systems from the authorities. This deregulation can lead to serious problems, as the indiscriminate use and abuse of these apps, which could damage the more traditional sectors of the economy (hotels and regular taxis for example), but at the same time a strong regulation could freeze the development of this new sector and prevent its progress and rise.

Those who oppose the growth and development of sharing economy are the abovementioned representatives of the more traditional sectors, which feel threatened by these new apps that offer the same kind of services but at more affordable prices. Taxi drivers, for example, have opposed since the beginning the entrance of the app “Uber” in the country, as it represents a serious competitive challenge for them. Also the Hotel and Hospitality Industry opposed the services provided by Airbnb, especially in Rome, where Hotels have high prices also as an effect of the tourist tax, an amount that is of course not to be paid by Airbnb users.

In March 2016, the Innovation Parliamentary Intergroup, composed of members of the most popular Italian political parties, presented a law proposal at the Chamber of Deputies of the Parliament, aimed at regulating this new growing area. The idea at the core of sharing economy is to share goods and services, but in some cases it has become a real business, which has to be regulated in order to protect the already existing sectors in the market.

First of all, the so-called “Sharing Economy Act”, which at the moment is still a proposal, calls for a fiscal regulation of these platforms: article 5.1 of the law proposal states that the incomes up to 10 thousand euros deriving from these new services will be named as “non-professional income deriving from sharing economy”, and will be included in a separate section of the income declaration. For these earnings the tax rate will be 10%. Upper incomes (for more than EUR 10,000) will be cumulated to autonomous or dependent working incomes, and will be taxed according to the relative tax rate. The sharing agencies will have to pay these quotas to the authorities as taxes. This, according to the law signatories, could considerably raise the country’s tax revenues from EUR 150 millions to EUR 3 billions by 2025.

Moreover, the payments will have to be done online only (this measure is probably aimed at avoiding possible fiscal evasions, which could become frequent if there are no controls). The law proposal has been under public consultation (with the possibility of submitting comments that will be analyzed by the deputies while revising and writing the final version of the law) until May 31, and has raised of course critics and observations among different stakeholders.

For example, some sharing economy entrepreneurs have underlined that this law is not taking into consideration the current debate occurring at the European Commission, which will lead to a tracing of guidelines for the Member States for regulating this new sector. Waiting for a previous EU action, and acting as a consequence of the latter, would be wiser for the Italian Parliament, they argue.

Also, according to the same subjects, this law is neglecting the important part of the consumer protection: there is no measure aimed at ensuring that a good service will be provided to the consumers, in fact, the topic is simply omitted. Moreover, the fiscal division of those who would use these platforms in a non-professional way from those who would be professionals is worrying, and the fact that these apps will have to refer to the authorities for the tax payment is also a source of disappointment. The main concern is that this law could be an impediment to the development and growth of this new evolving sector.

In any case, all these stakeholders have shown a positive attitude toward the Parliament, which is finally facing the issue, even if not in the “more optimal way”, we could say.

The law proposal could pass by the end of this year, and in this case the sharing economy services will become effectively legal in Italy.

The “Uber Problem” and the Debate Raised in Italy

The “Uber” application has raised a strong and intense debate in the country, which led to a sentence of the Milan Tribunal affirming the illegality of UberPop services (this also happened in France, and in other countries as well). Uber services have in general always raised critics among regular taxi drivers, because since the app entered into the country, they suffered a highly increased competitiveness never existed before.

The case that brought to the illegality of UberPop started with an “accident” which happened about three years ago with a taxi driver from the regular Uber service, therefore in possession of a valid license to carry passengers. Rules in Italy establish that Uber taxi drivers cannot stand in the streets and take random passengers looking for a lift, but they have to wait in arranged areas and agree by phone for the service, before taking them in the car. An Uber taxi driver did not follow this regular procedure in 2013, and the police stopped him. A legal case followed this episode, which brought to the sentence that outlawed UberPop services in the country, for “unfair competition” against licensed taxi drivers.

So, UberPop is not officially legal (and is actually blocked) since then, not only because of the reason above, but also because it is considered not enough safe for users: there are no controls on the vehicles used, and there are no controls on who effectively are those people who offer the lifts. UberBlack (with licensed drivers) remained (and is still today) active, even if the Milan Tribunal claimed that this service too has to be considered as abusive in certain cases: as explained above, it is not sufficient for an Uber driver to be in possession of a license, because he has to wait in certain areas (garages, special parking places) for the client’s call in order to fulfill his duties.

It could be therefore argued that the challenges against the American firm did not cease to exist since the restrictions and the criticism coming from the authorities (and from the regular taxi drivers) still occur.

Gloria Leccese
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