“Sharing economy”, it all started when people around the world are ready to rent rooms, cars, equipment, co-working space to the people who need it at the moment. This method of sharing is only possible with the help of the Internet and advancement in technical infrastructure.
Even Though it offers endless possibilities to enjoy the benefits like high degrees of freedom, easy adaptation, geographical distribution, wide selection range, it has to be enable with transparency in security and insurance coverage.
In the future, the rental business is about to expand globally as we can never imagine.
These days, it is creating much more value and growth of these economy triggers many countries to adopt regulations for the safety of both sides who access those platforms.
Let’s see how it is regulating in Europe and China.
Sharing economy regulations in Europe
The sharing economy has become an inevitable part of the global economy. The regulations are acknowledging that this economy is increasing and providing new opportunities and sharing.
Regulating is not an easy task but it is still growing in many ways and European level integration will confer many benefits. The rise of this economy is grabbing regulatory attention in both national and European levels.
Business entities or private individuals
Sharing economy growth is changing the face of European business as well as many platforms around the world, creating new opportunities for startups. At the same time, the fast-growing sharing economy is providing personal services on demand. The rate of profit growth in this sector will be approximately 50% per year.
This platform is providing a contractual relationship by building trust. It is different from other platforms and it is likely that their innumerable functionalities imply that more comprehensive responsibilities and liabilities to be followed. Let us take the example of Uber. Uber is providing comprehensive guidance to drivers concerning the legal side of ride-sharing. It guarantees to users in case of any emergency. Expecting this economy will acquire more liabilities and regulations.
The major advent of this economy is insurance. The sharing platform is only successful when it creates trust between people. In order to create requisite trust, many sharing economy platforms have begun to guarantee their users in many terms.
Let us look at Airbnb for example,
If someone thrashed your apartment, in case of emergency or any disagreement between platform and service provider, Airbnb now guarantees to pay for damages at a certain amount.
Paying tax is important for the business. Income from this economy services should be declared and taxed because revenue from these platforms is escaping the attention of tax authorities. Avoiding paying tax is an endemic problem in Europe hence taxation authorities have found the correct way to ensure proper oversight with these income streams.
Regulations in member states of Europe
It has developed in various member states and also seems to be a rise in the judiciary levels. Let me explain to you about the regulation and compliance in various member states,
It stands out as an undisputed leading figure in the sharing economy. It accounts for EUR 6.5 billion and approximately 75,000 people employed by these economy platforms in France. The significance is mirrored in the relative contribution of the platforms to France’s overall economy.
This sector is expected to be a future source of revenue. The legislative framework in France is flexible and supportive of the development of this economy. With the unexpected growth in France, regulations are becoming tougher and tighter.
The overall market volume in Belgium was approximately EUR 171.6 million with total employment of 2228 persons. The accommodation sector generated the highest revenue with EUR 70.5 million.
According to the regulation in Belgium, all the employees can earn revenues upto EUR 5000 per year and it is taxed at a rate of 10%. Transactions should take place on the platform approved by Belgian authorities. It is instructing that these platforms are responsible for collecting the taxes directly during the transactions.
One of the powerhouses of this economy in Europe is the United kingdom. Its overall market reached EUR 4.6 billion and it is second to France. The number of employees is estimating at up to 69,431. It is estimating between 47% and 64% of the people are taking part in this economy.
Aim of the Regulations in the UK is to set out a clear framework of values and principles and enhancing the reputation of the sharing business. Regulations are as follows,
- Both the service providers and users should act honestly and sustain strong relationships in building trust.
- Platforms should provide a high level of safety for all products and services and also for all the business transactions.
Regulations in China
China’s sharing economy is expecting to keep a rapid annual growth rate of more than 30 percent over the upcoming years. The market turnover of china’s sharing economy reached 4.9million yuan($763.5billion). More than 700 people were involved and employees were upto 7.16million and there is an increase in year by year.
The regulatory frameworks in China keep a rather prudent attitude, supporting its evolvement and correcting particular challenges thus raised.
The Chinese have adopted a general regulatory framework for all sharing economy. The opinion so far remains the highest level of the regulatory document from the central government. It mostly praises the economic importance and innovative business model that can improve efficient allocation, dissolves excess production capacity, promotes the convenience of lifestyles, and serves as a driving force for mass innovation.
- The platforms should be a registered company with legal personality.
- It should contain safe and secure payment solutions with proper payment gateways.
- The platform operators should set up a complete set of internal management rules.
- They should fulfill the needs and requirements adopted by local authorities.
Wrapping this up, there are many rules and regulations are adopting worldwide. We still need to have a closer look at how the regulations id going to monitor in the future.
If you have the desire to start sharing economy on your own, take down this entire regulation laid down in this post. Meanwhile, if you need technical assistance for building sharing economy websites & apps, feel free to contact us at email@example.com
Knowing the regulations will help you step ahead in the market and building a secure platform. Best of luck!