The Gig Economy: A tax and labour challenge for the EU


Approximately 2% of EU adults have their main source of income coming from what is being called the ‘gig economy’, and up to 8% earn occasional income from these work alternatives. The data, from a study by the European Commission’s Joint Research Centre, makes it clear that we are facing an unavoidable reality for Community institutions, posing challenges in the areas of taxation and social protection. 

The peculiarities of these jobs are many, such as the possibility that these workers are in various activities simultaneously – possibly under different conditions and even with different employment status – and obtain income in more than one Member State, with the consequent varying tax regulations. The fact that the companies operating these platforms, such as Uber, Deliveroo or Amazon, are based outside of the EU only complicates things.  

The complications suppose the risk of an increase in the informal economy as well as the possible dismantling of the competitive landscape, with companies that conform to ‘classical’ labour legislation being the hardest hit. If a considerable segment of the population does not pay social contributions and taxes, or pays less than they should, it will end up seriously affecting the capacity of all national systems for social protection. 

This is why it is particularly important that the EU be able to establish constant and solvent information flows to monitor the activity of these platforms so that competition, with respect to already established companies, is not distorted. Some countries have taken the bull by the horns, taking steps to obtain data on the platform workers’ income directly from the companies. This is the case in Estonia, Denmark and France. In principle this decision is positive, but it also opens the door to 28 different legislations, compromising true application of the concept of a single digital market and damaging the creation of new platforms in the community. Regulatory fragmentation also implies from the start a contradiction with the work of the platforms, which is inherently transnational. 

The benefits of a Digital Single Window

A recent report published by the European Commission – which does not necessarily reflect their opinion – tries to provide solutions for this new reality still to be channelled, delving deeper into the concept of the Digital Single Window and starting from the above-mentioned cases of Estonia, Denmark and France.  

The goal of this Digital Single Window would be to facilitate automated reporting of economic data from these platforms to national tax and social security agencies for collection in accordance with national regulations. 

The authors of the study, Vili Lehdonvirta and Daisy Ogembo of Oxford University, point out that the development of this income information system would have great advantages, such as adding EU-wide influence and pressure on foreign platforms to meet the requirement. The three countries that have started down this road separately, the authors note, are finding it difficult to collect information from companies that do not have a real and permanent presence in their country. 

In addition, a Digital Single Window would allow Member States to combine their financial and technical resources to have a more efficient system at lower cost, and the platforms themselves would benefit by having a single window, not 28, where they can provide information.  

The authors of the report recommend that the EU launch a pilot project for a Digital Single Window for all employment data on platforms. Only with this information will the Member States be able to make agile and informed decisions in the face of a growing and disruptive labour phenomenon.