Urgent appeal from TAE: Reject the Spanish proposal for a directive on the rights of platform workers!

URGENT APPEAL TO EU MEMBER STATES BY THE EUROPEAN TAXPAYERS’ ASSOCIATION, THE FREELANCE MOVEMENT AND ZPP POLAND – UNION OF ENTREPRENEURS AND EMPLOYERS

One-person businesses in Europe under threat: Member States should reject the Spanish proposal for the Directive on the Rights of Platform Workers tomorrow!

The provisional agreement on the Directive on the Rights of Platform Workers jeopardises thousands of sole traders who use platforms to offer their services, whilst disregarding their wishes and objectives. Should the directive be adopted, sole traders would be forced to enter into an employment relationship that restricts their options and severely reduces their flexibility in providing their services via platforms. Furthermore, they would be burdened with the task of creating the digital infrastructure for their own digitalisation. This would massively increase costs for small business owners and effectively exclude them from accessing customers via platforms.

The provisional agreement on the Platform Workers’ Directive (PWD) will hinder the digitalisation of SMEs, as it creates additional barriers to acquiring customers via digital platforms. This would result in a decline in SME productivity and fewer choices for EU citizens. The PWD agreement ignores the fact that many platform workers offering their services via platforms are SMEs or family businesses, which could consequently lose an important channel for diversifying their customer base.

The provisional agreement on the Platform Workers’ Directive overlooks a key issue: taxation. Employment status entails both rights and obligations. Sole traders who, due to the uncertainty created by the presumption mechanism, could be reclassified against their will may face a significantly higher tax burden than they had originally anticipated as employees. Self-employed workers are also subject to very different tax obligations.

The provisional agreement on the Platform Workers’ Directive (PWD) marks a turning point for the European Union’s digital economy. However, its consequences could be severe for small and medium-sized enterprises (SMEs) and sole traders. These businesses, which have used digital platforms to expand their reach and flexibility, now run the risk of being incorporated into a regulatory framework that may not meet their needs and objectives.

1. Forcing unwanted employment status on one-person businesses

At the heart of the problem lies the possibility that the directive could force thousands of sole traders into employee status. This development ignores the fundamental reasons why many entrepreneurs choose platform work: flexibility and autonomy. By mandating employee status, these individuals could lose the ability to offer their services on their own terms – a flexibility that is essential to their business model.

2. Overlooking the tax trap

A particular cause for concern regarding the directive is that it does not take sufficient account of the tax implications. The presumption mechanism contained within it, which is unclear, could result in many sole traders being reclassified against their will. This reclassification could leave them facing a significantly higher tax burden than expected, due to the differing tax obligations of employees and self-employed service providers.

3. The burden of developing digital infrastructure

Furthermore, the Directive places a considerable burden on these small businesses when it comes to building their digital infrastructure. For many small business owners, this means a significant increase in operating costs and effectively excludes them from accessing customers via digital platforms. This aspect of the Directive not only undermines the entrepreneurial spirit but also limits the ability of small businesses to compete and grow in the digital economy.

4. Hindering the digitalisation and market access of SMEs

The Directive also poses a significant obstacle to the digitalisation of SMEs. Additional complexity and regulatory hurdles inadvertently restrict their ability to use digital tools to attract customers and deliver services. This restriction could lead to a decline in SME output and reduced choice for EU citizens. It is crucial to recognise that many platform workers are, in reality, SMEs or family businesses. The provisional agreement on the use of platforms therefore risks depriving these businesses of a vital channel for diversifying their customer base and ensuring their economic viability.

Conclusion

The provisional agreement on the Platforms Directive, whilst intended to regulate the digital economy with good intentions, neglects the need for flexibility and control on the part of SMEs and entrepreneurs. In its current form, it threatens to stifle the entrepreneurial spirit that drives much of the innovation and economic growth in the EU. A more nuanced and legally certain approach, which recognises and takes into account the diversity of stakeholders within the digital platform ecosystem, is essential. Negotiations on the Directive are continuing and should aim to promote, rather than hinder, the growth and flexibility that digital platforms offer to small business owners and enterprises.

 

Brüssel/München, 23.1.2023