The volume of the sharing economy in the Czech Republic could reach 1.19% of GDP, i.e. CZK 59.9 billion, as follows from Deloitte’s latest study of the sharing economy in the Czech Republic. Its highest potential is in the sectors of transportation, accommodation and finance. Deloitte’s analysts estimate that at present the volume of the sharing economy is thirty times smaller. The country with the most developed sharing economy in Europe is the United Kingdom.
The share of the sharing economy in the Czech GDP currently ranges only between 0.02% and 0.04%, which amounts approximately to CZK 0.9 billion to CZK 2 billion. In the United Kingdom the percentage of the sharing economy is one the highest, representing 0.09% to 0.19% of GDP. However, the sharing economy is a dynamic industry with significant room for further growth. Its potential size in the Czech Republic is estimated between 0.51% and 1.19% of GDP. In nominal terms with respect to GDP, this would amount to CZK 25.7 billion – CZK 59.9 billion. Although in the Czech Republic the share is relatively smaller compared to developed countries, it exceeds, for example, Germany or Austria. After the United Kingdom, it is the highest in Spain, Italy and the Netherlands.
“The potential of the sharing economy in the Czech Republic will grow together with the further expansion of high-speed internet, smartphones and the growth of digital literacy. The question is whether people will start to prefer sharing over owning. In such a case we can expect that a larger portion of the population will participate in the sharing economy and its importance will grow,” says David Marek, Deloitte’s chief economist.
Deloitte’s study identified the following economic benefits of the sharing economy:
- Making luxury goods accessible to consumers who would not be able to afford owning them;
- Generating sufficient income for the owners of assets or durable goods and a more flexible use of their time;
- Higher use of capacities in the economy;
- Increase in the quality of provided services thanks to the competition between sharing platforms and traditional companies; and
- Savings of natural resources.
Deloitte’s study indicates that an important influence on the development of the sharing economy is the legislation, which should react sensitively to its development, for example by preparing a special law, as has been the case in some EU countries. Subjugating the sharing economy to existing regulations would significantly lower the potential of this industry and limit its economic benefits.
“A continuation of the current state could lead to legal uncertainty and the new forms of business remaining in a semi-legal mode. Aside from the development of the sharing economy, it also complicates regulation and tax collection in this industry,” comments Martin Bohuslav, a lawyer at Deloitte Legal.
The development of the sharing economy also brings questions in the area of taxation. Czech tax legislation has so far not managed to react to the new and fast-growing business sector.
“Correct taxation of the sharing economy requires not only the identification of the assets that should be taxed, but also an unambiguous definition of income and its recipient. Given the specifics of this sector, it would definitely be suitable to launch an IT platform that would allow automated preparation of tax returns of the participating entities,” says Kateřina Novotná, Deloitte’s tax expert.
The sharing economy also represents a certain risk for the Czech Republic. Its potential boom could limit the demand for goods such as cars.
“While this trend would decrease the wasting of resources, it could also significantly lower the production of the automotive industry. A negative impact could also be felt by the hotel sector, although luxury hotels will be affected only minimally. Traditional sectors of the economy can react to the boom of the sharing economy by integrating its principles in their operating models,” adds David Marek, Deloitte’s chief economist.
Deloitte’s study of the sharing economy is available here.