Taxing Earnings from the Platform Economy: An EU Digital Single Window for Income Data?1

Text: Daisy Ogembo, Vili Lehdonvirta

Ever more financial tran­s­actions in the platform economy are settled online, posing new challenges to tax and social security systems. Are options for an EU-wide reporting system already available? And are there any other issues that need to be included in the extended discussion?


Digital transaction platforms such as Uber, Airbnb, Deliveroo and Upwork have emerged as a new source of income for private individuals. It is difficult to estimate the size of the platform economy for various reasons, including the fact that it is often a source of secondary income and the income earned is not consistently reported to tax authorities.2 According to some estimates, the gig economy3 in the European Union alone gener­ated € 3.6 billion in revenue in 2015, while the online outsourcing was projected to grow to $ 4.8 billion in 2016.4 Some platforms offer work in exchange for income, while others allow people to provide services or rent out property. These new income sources present new challenges for tax and social security systems. This is especially the case for gig economy or labour platforms.

Platform work refers to “all labour provided through, on, or mediated by platforms, and which features a wide array of standard and non-standard working arrangements/relationships”.5 It is typically ‘a way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for an employer’.6 Platform work includes both localized gig work such as taxi and food delivery services provided through platforms like Uber and Deliveroo, and web-based platform work such as graphic design and data entry through platforms like Fiverr and Upwork.

While it is not a main source of employment, platform work is growing rapidly. According to one study, platform work is the main source of income for approximately 2 per cent of adults across 14 EU Member States, while up to 8 per cent earn occasional income from it.7 Platform work has thus gained a foothold in European labour markets.

Taxation of and social security protection for platform work

The rapid development of platforms presents policymakers with new challenges: these novel ways of organising work are challenging how we collect taxes and social security contributions. Consequently, there is a risk that a significant amount of platform work is not fully taxed and that platform workers are not adequately covered by social security systems, with future adverse consequences to individuals and public finances.8

Part of the difficulty of taxing and extending social security coverage to platform workers stems from their complicated employment status. In most, but not all, instances, platform workers are classified as self-employed contractors.9 The self-employed tend to be significantly less tax compliant than employees whose salaries and wages are subject to employer withholding scheme, a fact that is well-documented in tax evasion literature.10 Non-compliance by the self-employed is often a result of a combination of factors including high compliance costs and inadvertent underreporting. The self-employed often have little tax knowledge, struggle to navigate complex compliance rules, and cannot afford high compliance costs such as the cost of a qualified accountant or tax advisor. They also have an increased opportunity for outright evasion because they can more easily under-declare their income, exaggerate their deductible expenses or operate wholly in the shadow economy.

In addition to these general challenges, tax and social security compliance by platform workers is complicated by the fact that they are often involved in multiple simultaneous engagements, possibly on different terms, and therefore may have different employment statuses even within one country. Platform workers can, moreover, provide labour in multiple jurisdictions thereby earning income that may be taxable in more than one state and subject to different rules on deductibility of expenses in those jurisdictions. A further complication arises when one attempts to apply a progressive income tax to platform income earners – even within a jurisdiction – and more so across borders. Finally, in the European Union, these complexities are compounded by the fact that companies operating the platforms are often based outside the EU.

„Consequently, there is a risk that a significant amount of platform work is not fully taxed and that platform workers are not adequately covered by social security systems […]“

Platform work, such as food delivery services, is growing rapidly. With regard to taxation and social security this presents political decision-makers with new challenges. Photo: Daisy Daisy /

Thus, proliferation of platform work and other types of platform income pose significant revenue mobilisation challenges for tax and social contribution agencies and, if improperly managed, could contribute to an increase in the shadow economy. Non-compliance could also result in an unfair competitive advantage for firms utilising platform work and platform-based models of providing accommodation and other services. Moreover, ‘[i]f a sizeable segment of the population does not pay social contributions or insurance and underpays on tax and pensions, this will even­tually negatively impact the ability of national social protection systems to provide public goods and social benefits, while the demand for those benefits will increase’.11

Modelling a digital single window at EU level

To address these challenges, some EU member states have embarked on initiatives to obtain data on platform users’ earnings directly from the platform companies. The objective of the authors in this paper is to construct case studies depicting the efforts by three Member States to obtain income data from platforms and then assess the viability of upscaling those national initiatives by developing an EU-level digital single window that would facilitate the automated reporting of income data by platforms and the forwarding of that data to national tax and social security agencies for taxation and collection according to national rules.

The case studies aim to highlight the most salient aspects of each case and identify the history, motivation, objectives, design characteristics and functionalities of the data reporting systems, as well as the relevant stakeholders, administrative and infrastructure requirements, costs and any evaluation results. Cross-case analysis was then conducted to identify potential gains that could be achieved and difficulties or risks that would be encountered if the individual national efforts were replaced with an EU-level approach. Based on the findings, the authors put forward two alternative models of an EU digital single window.

The three countries selected for case studies were Denmark, Estonia and France. These countries were selected for study because of the unilateral initiatives that they had taken to set up reporting systems for obtaining income data from platforms for the purposes of taxation and social security contributions.


Based on the case studies, the authors take the view that there are several benefits of developing an EU-wide income reporting system. First, collecting income data from foreign platforms without a registered presence or permanent es­tablishment in the country is a challenge for all three case countries and is likely to be a significant hurdle for all the member states. With a digital single window, Member States can pool their power and clout to exert pressure on foreign platforms to comply with an EU-wide requirement.

„A digital single window would allow Member States to pool their financial and technical resources for a more cost-effective system.“

Second, developing a sophisticated, automated API-based reporting solution that presents low compliance and maintenance costs is an expensive venture. While the costs and technology may be within the reach of higher income-earning Member States like Denmark, it may not be easily affordable or accessible for some other Member States. A digital single window would allow Member States to pool their financial and technical resources for a more cost-effective system.

„The most workable avenue for the time being may be for each Member State to continue developing its own solution.“

Third, it is evident that the case countries are already at advanced stages of designing different income reporting systems and it is likely that other Member States will begin similar initiatives. While this approach may not pose a challenge for platforms that operate only domestically, a digital single window would benefit platforms that operate cross-jurisdictionally by saving them from having to use and comply with 28 different reporting systems. Further, lower compliance costs could encourage the growth of smaller do­mestic platforms and nudge them towards ex­panding to other Member States without expe­riencing higher compliance costs. This growth and expansion would benefit innovation in Europe.

However, the authors are also cognisant of the significant barriers to achieving such an ambitious system. The most significant barrier remains the lack of harmonisation of income taxation and social security systems in the European Union and the fact that income taxation is not an EU competence. Further, if taxpayers’ data are being shared more widely or stored more centrally, there is a risk of more frequent or more serious data breaches.


The most workable avenue for the time being may be for each Member State to continue developing its own solution. In time, some data sharing re­sembling the network model is likely to develop spontaneously between competent authorities under the auspices of existing data sharing ar­ran­gements, such as the mandatory Automatic Exchange of Information scheme. The FP/097 Working Group’s efforts to develop standard data schema will help drive this forward. While a huband-spoke digital single window would allow the pooling of resources and clout and could simplify compliance, it would require the creation of a new legal basis in EU law – a more distant prospect. It may also be that the network model would eventually lead to a Member State serving as a hub, a scenario that may only require amendments to existing tax co-operation and information sharing arrangements rather than new EU legislation.


This chapter is an abridged version of an article published as Ogembo, D., and Lehdonvirta, V. (2020) Taxing Earnings from the Platform Economy: An EU Digital Single Window for Income Data? British Tax Review (2020) (1): 82–101. Reproduced with permission from the publisher.”
Otto Kässi and Vili Lehdonvirta, ‘Online Labour Index: Measuring the Online Gig Economy for Policy and Research’ (2018) 137 Technological Forecasting and Social Change 241, 242.
Comprising crowd funding, asset sharing, transport, on-demand household services, and on-demand professional services.
See Abigail Hunt and Emma Samman, ‘Gender and the Gig Economy’ (2019) ODI Working paper 546 10 ( and Siou Chew Kuek and others, ‘The Global Opportunity in Online Outsourcing’ (World Bank 2015) Report No ACS14228 3 ( accessed 9 January 2020.
Sacha Garben, ‘Protecting Workers in the Online Platform Economy: An Overview of Regulatory and Policy Developments in the EU – Safety and Health at Work – EU-OSHA’ (European Agency for Safety and Health at Work (EU-OSHA) 2017) European Risk Observatory Discussion paper ISSN: 1831-9343 13 ( accessed 23 December 2019.
Annarosa Pesole and others, ‘Platform Workers in Europe’ (Publications Office of the European Union 2018) EUR 29275 EN 3 (ISBN 978-92-79-87996-8, doi:10.2760/742789, JRC112157) accessed 23 December 2019.
High-Level Expert Group on the Impact of the Digital Transformation on EU Labour Markets. (2019). ‘The Impact of the Digital Transformation on EU Labour Markets’. Report Commissioned by the European Commission ISBN 978-92-76-02072-1 doi: 10.2759/586795 KK-01-19-339-EN-N 43 ( accessed 23 December 2019.
For purposes of this paper, we assume that the vast majority of platform workers are regarded as self-employed under the law. However, we acknowledge the limits of this assumption because of the diversity of employment categories in various countries.
Milka Casanegra de Jantscher and Vito Tanzi, Presumptive Income Taxation; Administrative, Efficiency, and Equity Aspects (International Monetary Fund 1987); Benno Torgler, ‘The Importance of Faith: Tax Morale and Religiosity’ (2006) 61 Journal of Economic Behavior & Organization 81; Joel Slemrod, ‘Cheating Ourselves: The Economics of Tax Evasion’ (2007) 21 Journal of Economic Perspectives 25; Benno Torgler and Neven T Valev, ‘Gender and Public Attitudes Toward Corruption and Tax Evasion’ (2010) 28 Contemporary Economic Policy 554; Henrik Jacobsen Kleven and others, ‘Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark’ (2011) 79 Econometrica 651; Christoph Kogler, Stephan Muehlbacher and Erich Kirchler, ‘Testing the “Slippery Slope Framework” among Self-Employed Taxpayers’ (2015) 16 Economics of Governance 125; Ana Cinta G Cabral, Christos Kotsogiannis and Gareth Myles, ‘Self-Employment Income Gap in Great Britain: How Much and Who?’ CESifo Economic Studies ( accessed 12 October 2018; Arun Advani, William Elming and Jonathan Shaw, ‘The Dynamic Effects of Tax Audits’ (2017) IFS Working Paper W17/24 39; Daisy Ogembo, ‘Are Presumptive Taxes a Good Option for Taxing Self-Employed Professionals in Low and Middle-Income Countries?’ (2019) 5 Journal of Tax Administration ( accessed 25 August 2019.
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