The internet did not invent sharing – however, it has opened up a range of new sharing opportunities.

Starting, in particular, with pure online-to-online file sharing in the beginnings of the internet, online-to-offline sharing possibilities, such as ride sharing centres and apartments sharing opportunities (e.g. the free-to-use Couchsurfing and Hospitality Club platforms) came up pretty early, too. At a later stage, global commercial enterprises entered the market and commercialised sharing, moving it from an altruistic to a rather capitalist concept. Two of the most important players in the German market are Uber and Airbnb.

Uber

Uber, a transportation services app, faces legal problems in a number of countries, among them Germany. Even though Uber does not offer any transportation services itself, a number of courts in Germany assume that its services should be strongly regulated and the German Passenger Transportation Act should not only apply to Uber’s drivers but also to Uber itself. Neither Uber nor Uber’s drivers under Uber’s most important service “UberPop” hold the necessary transportation concession in order to meet the requirements set out under the Passenger Transportation Act. Accordingly, in 2014 local authorities banned the UberPop services in a number of regions. Respective prohibition orders from local authorities have been upheld by most competent courts during the interim proceedings (e.g. Higher Regional Administrative Courts of Hamburg and Berlin). The German Constitutional Court did not accept Uber’s complaint against these rulings.

Regarding competition law questions, the Regional Civil Court of Frankfurt ordered a nationwide prohibition of UberPop in August 2014; for the area of Berlin, the Regional Civil Court of Berlin made a comparable decision in April 2014 although it was later revoked due to procedural issues. Similar to the administrative courts, the civil courts decided that Uber’s business model leads to a breach of the German Passenger Transportation Act.

As a consequence of these court decisions, Uber filed a complaint to the European Commission in April 2015 against Germany, regarding the imposed bans. Furthermore, Uber reduced the transportation fare to EUR 0,35 per kilometre. By doing so, Uber hopes to take advantage of an exemption provision in the German Passenger Transportation Act, according to which no concession is required if the transportation fare only covers the operating costs of the ride.

Regardless of the question of whether the above-mentioned court decisions are correct and will stand during the appeal and main proceedings, there are also significant risks for Uber drivers from a liability point of view – private car insurance policy will often not cover accidents which happen while offering commercial car driving services, in the worst case leaving the drivers with potentially huge damage payment claims.

Airbnb

Airbnb offers roughly 800,000 beds in about 190 countries, thought to be more than any hotel company in the world. In Berlin alone estimated an 8,000 to 12,000 apartments are offered via Airbnb, which made the Berlin local authorities afraid that such a broad offering of short rental opportunities might destroy the original character of the different neighbourhoods and become a significant burden for the housing market, leaving fewer apartments for regular rent. Accordingly, a misappropriation law (“Zweckentfremdungsgesetz”) was passed in Berlin in autumn 2013. People who want to rent out their apartments on a short term basis were obliged to register their apartments by 1 May 2014, and could take advantage of a 2-year-grace period for the registered apartments. After the expiration of this grace period in mid-2016, the city of Berlin will only grant a short-term-rental-permit for about 6,000 apartments.

Even in cases where no local law prevents house owners or renters from offering their apartments on platforms like Airbnb, other legal risks may arise. In the case of rented apartments, subletting via Airbnb will, in many cases, be a breach of the original rental agreement, potentially giving the owner of the apartment the possibility of terminating the rental agreement. Furthermore, liability risks may arise if short term renters are not diligent when using the apartments – although this risk can be mitigated insurance is available.

Further issues

A risk that exists regardless of the specific sharing services offered by the individual is that, if the respective services are offered on a regular basis, the individual may be considered a commercial provider, making his sharing services taxable and potentially subject to specific administrative permits. For instance, if an apartment is offered regularly via Airbnb, there is a risk that the lessor will be treated as a hotel operator (see our article Taxing the Collaborative Economy

Unfortunately, there is no helpful legal guidance on when the offered services will no longer be considered “private” but “commercial” activities in Germany. As a consequence of this legal uncertainty, some sharing platforms started an online petition in 2014, asking for a clear demarcation between private and commercial services, e.g. by fixing an earnings limit. Until such clear guidelines are given by the legislator or the competent courts, legal uncertainties remain.