Everything You Need to Know About the New Ridesharing App From Waze and Google

How does it work? Is your regular car insurance good enough? And do you need to pay taxes on the money you get for expenses?

Bloomberg

The new ridesharing service RideWith, which had its worldwide launch in Israel this week, will allow drivers to link up with passengers going to and from work, thus saving time and money. Waze, the Israeli navigation application that Google bought  for close to $1 billion  two years ago, chose to launch the service only in Israel as a pilot program to study the market before adapting it for other cities and countries. Waze made the application available on Monday.

Initially, the pilot is limited to three cities – Tel Aviv, Ra’anana and Herzliya, with the intention of enabling workers who live in Tel Aviv and work in the high-tech areas of Ra’anana and Herzliya to ride together in the morning on their way to work and again in the evening on their way home. The service will also be available to students at Tel Aviv University. Depending on the demand and the success of the pilot, Google will gradually expand the service to other venues in Israel.

RideWith links passengers who want to get to their workplaces with drivers making a similar trip. Drivers are limited to two rides a day, and those must be only between their home neighborhoods and workplaces. The passenger pays the driver a nominal fare for the ride, as determined by the distance. The service is designed in such a way that drivers will not be able to transform it into a business, but will only receive compensation for the time and the gas they use to provide transportation for an additional passenger in their car.

Google will also offer a separate carpooling app, using a uniform platform based on the Waze app, enabling employees of a given company to share rides among themselves. Payment for the ride is optional and it will be possible to use it for free. Thus, workplaces will people to organize carpools for their employees. At Google they decided to launch the ridesharing pilot in Tel Aviv because of the widespread use of Waze in Israel. Sources close to Waze estimate that about 200,000 employees in Israel carpool to work and most of them are concentrated in the area of Gush Dan. 

After the new ridesharing apps were announced and launched, Israelis have raised a number of consumer and regulatory questions. Here are a few of the answers.

How do I join the service?

Passengers interested in using the service to get rides must download the RideWith app (which for now is only available on Android phones and in Google’s Play Store), and sign up on a waiting list. Drivers will be invited to join the service through the regular Waze application, once there is a large enough base of riders. Waze and Google have a large amount of information on their users. That enables them to know almost exactly where the users work and where they live, even if the users have not entered such details in the application. This allows Waze to know that both the passenger and driver are telling the truth.

Must there be a charge for the ride? What if I want to offer a ride for free?

There is no requirement to pay for the ride, so the service is also appropriate for regular carpoolers who do not pay each other, or for companies that want to use it to arrange carpools for employees. In any case, Google will set a maximum price for every ride based on distance.

Why do I need to book in advance?

Prior planning will enable passengers to schedule their day according to the timetable of the driver, in particular the time they leave and return home. This will also allow riders to make alternative plans if they cannot find a driver. Waze recommends planning the rides the night before, but it is possible to try to set up a ride just a few minutes before the desired time.

Will companies encourage employees to share rides?

Today, most high-tech companies have a ceiling on the mileage and gas they pay employees who have company cars, so if it is worth it for the drivers it could succeed. The companies are interested because it could save them money in the cost of what they spend on employee cars. In addition, there are the environmental and social aspects of the service.

Have there been previous attempts to create ridesharing platforms?

There were attempts in the past within companies, but it was inconvenient and did not work well. Usually it involved drivers taking turns, and if one day the driver was held up at work, in a meeting or for some other reason, everyone else had to wait too. A real time-scheduling app could solve these problems. Estimates are that only some 5% of employees in high tech share rides today.

Kfar Sava launched a ridesharing service about a year ago, in an app for city residents. The city also spent money on an advertising campaign to get residents to use it. The city says some 9,000 people use the app, most of whom use it daily, according to the city spokeswoman.

Will companies be able to force employees to share rides?

Companies cannot force employees to do so for a simple reason: A person who receives a company car pays a certain amount for the cost of the car (the monthly leasing) as well as for gas, and is usually limited in how much mileage they receive as part of the package - and pays certain taxes on this benefit. It is impossible to demand that an employee drive others if he is paying for the costs already. But companies can give drivers incentives to do so.

How can companies give such incentives for ridesharing, and is there a cost for them, such as in taxes?

When gas prices were at their peak, companies encouraged employees to save and join carpools, and provided financial incentives to do so. For example, employees who lowered their car expenses significantly received half of the savings from the company. Given that drivers often give up their privacy by offering rides, along with some inconvenience, such an incentive may be necessary. In addition, they could provide closer parking spaces for carpool drivers.

Will companies allow employees who drive to charge others for the riding in their company cars?

This is a problem. The company owns, or leases the car, and the employee is given the right to use it. There is a legal question of whether the employee can charge for the rides offered in a car that is not theirs. It may not be possible. The car is intended for work purposes, not for making money. Legally, drivers who charge would then be commercial operators and this would require different insurance and a commercial driver’s license - in theory. It is also possible that in such cases it would be a criminal offense to collect payment. It is more reasonable to assume that the companies will not allow the collection of payment.

What about the car insurance?

This too depends on whether there is payment, or not. Today there is insurance coverage for everyone in the car, but if the driver is paid it is different. Waze said it is the driver’s responsibility to deal with insurance, and they should check it out.

So what happens if there is an accident?

Again, this depends on whether the driver collects money for expenses or not. The insurance companies are worried about this, because if there is an accident they will not cover it if the driver has been paid — unless the driver takes out a commercial policy. This is different than if you take a few friends for a trip, for example, and split the gas costs; in such a case you are covered. But the new service is different: it is a commercial ride if there is payment. True, you can buy such insurance to cover such a case, but it is at least twice as expensive. This is a regulatory issue, such as in other cases when the technology has outpaced older regulation — and there is not yet a solution.

So is it legal? Do I need a taxi license to drive a ride share?

In principal, the Transportation Ministry bans drivers from collecting payment for rides unless they meet a number of criteria that apply to buses, taxis or other specially licensed vehicles, such as for tourists. These all need special licensing — both the vehicles and the drivers. In any case, private cars are not included. Even if the payment is only meant to cover expenses, there is still a problem.

The Transportation Ministry said on Monday that they have yet to be asked about the matter. In any case, the issue is on the ministry’s agenda because of other businesses, such as Uber, which has still not received regulatory approval for its Uber X service in Israel.

Will I have to pay income tax on the payments I receive?

The answer may be complicated. You might not have to pay income tax if all you do is provide two rides a day, to and from work, and collect only a small amount, say 12 shekels ($3.17) each way for gas. In such a case this is not really a business activity and certainly not your main business. The cars are also meant to serve the employees and are not for business use. But there are other issues, VAT for example. The drivers could have to issue receipts and report the money to the tax authorities. After all, it is still income, and possibly taxable — even if you do not have to register as a business. Only time, and the Tax Authority — or the courts — will tell.

Will Google pay taxes on income from the service in Israel?

For Google, this is a business. They will receive 15% of the payments — and should have to pay taxes on this as they would on any other income in Israel. Google is a for profit company, after all, but as to how much of this will actually be paid in taxes is another, very different question.