European commission warns against cracking down on businesses that help ordinary people offer services to the public

This article is more than 4 years old

This article is more than 4 years old

The European commission has thrown its weight behind the so-called sharing economy typified by firms such as Uber and Airbnb, saying countries should only ban them as a last resort.

The growth of the sharing economy – defined as businesses that help ordinary people offer services to the public – has caused tension in several European countries over claims that existing industries are being damaged.

Uber, which lets people use their cars to offer taxi rides, and Airbnb, a service through which homeowners can rent out a room or an entire home, have been the subject of bitter protests in European cities.

But new guidelines issued by the commission on Thursday warned governments to think carefully before cracking down on such firms, which pulled in €28bn (£21.6bn) in revenues between them last year across Europe.

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“Absolute bans and quantitative restrictions should only be used as a measure of last resort,” the commission said in a statement.

Presenting advice aimed at providing clarity to consumers, businesses and public authorities, Jyrki Katainen, a commission vice-president, said stricter regulations on sharing economy companies could cost Europe.

Katainen, responsible for jobs, growth, investment and competitiveness, said: “We need a coherent approach if we want our dynamic startups to flourish or they will go somewhere else. Europe’s next unicorn [a startup company valued at $1bn plus] could stem from the collaborative economy.”

Speaking in Brussels, Katainen added: “We want to keep up, and keep Europe as open as the US for new innovative business models, at the same time as addressing the negative effects.”



The commission’s paper said companies in the sharing economy should not be subject to sector-specific rules – such as regulations aimed at hotels and taxi firms – unless they own assets and set the price of the service.

But Katainen also stressed that such businesses should not become a “parallel informal economy” operating free of regulation. He said: “It’s clear that the collaborative economy cannot be a way to abuse labour. Neither is it a way to avoid paying tax.”

Facebook Twitter Pinterest Jyrki Katainen says Europe should be as open as the US for innovative business models. Photograph: Olivier Hoslet/EPA

The commission’s guidelines are intended to address the increasingly fractious relationship between fast-growing businesses and the countries in which they set up shop. Airbnb users are facing extra taxes in Iceland, while Berlin has banned the rental of entire apartments, though the app is still advertising accommodation in the German capital.

Berlin is also among several German cities to issue an edict against Uber, which has faced similar roadblocks erected by regional and local governments in Spain and France, where its offices were raided by police.

State intervention has often followed protests or lobbying from competitors such as taxi drivers or the hotel industry, who complain that they are being undercut by rivals who do not face the same regulatory burden.



In response to suggestions that the digital sharing economy could kill off traditional jobs, Katainen said this was part of the evolution of the economy, adding: “New jobs have always replaced old jobs.”

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The EU commissioner Elżbieta Bieńkowska, responsible for internal market, industry, entrepreneurship and small and medium enterprises, noted that the sharing economy could offer job opportunities for those seeking flexible conditions. “This is an opportunity, not a threat,” she said.

The commission’s new guidelines state that service providers should only be required to obtain licences “where strictly necessary to meet relevant public interest objections”.

Frances O’Grady, the general secretary of the UK’s TUC union, said: “The EU guidelines are a good starting point because they make clear that sharing economy companies can be recognised as employers by member states. The UK must build on this to ensure every worker in the sharing economy gets a fair deal, full employment rights, the opportunity to join a union, and is not exploited by a distant tax-dodging tech firm.”

Web-based platforms do not need licences where they only act as intermediaries between consumers and those offering the actual service, such as a homeowner or driver.

Member states should also distinguish between individuals providing services on an occasional basis and providers acting in a professional capacity, by establishing thresholds based on the level of activity, the guidelines recommend.



The commission hinted that it could use the guidelines to ensure that national legislation does not violate EU treaties, a veiled threat to governments seeking to impose restrictive measures on the sharing economy.



While some countries have sought to discourage the sharing economy, UK micro-entrepreneurs with small online businesses and short-term landlords were handed £1,000 tax-free allowances in the March budget in a move welcomed by Airbnb.

New technologies have also sparked legal tussles due to the lack of legal precedent governing the services they offer.

The European court of justice has been asked to decide whether Uber is a transport company or digital service after questions from Spanish and Belgian courts.