Revenue will not look to prosecute Airbnb hosts who didn't pay tax
Published 14/08/2015 | 02:30
The Revenue Commissioners will not seek to bring prosecutions against people who have not paid tax on earnings from renting out rooms through the Airbnb online service.
A senior Revenue official told the Irish Independent it did not expect to uncover massive cases of tax evasion from its investigation of users of the peer-to-peer business.
Declan Rigney, assistant secretary in Revenue's planning division, said it would be seeking to pursue tax arrears and interest from Airbnb hosts who had failed to pay tax on their earnings, but prosecutions were not on the cards.
The comments came as one of the country's major accountancy firms, EY, said it believed the Revenue was mistaken in its belief that Airbnb hosts did not qualify for the rent-a-room tax relief.
EY said its analysis of the legislation, backed by senior legal opinion, was that earnings from the online room booking service qualified for tax relief under the rent-a-room scheme.
Under the scheme, up to €12,000-a-year can be earned from renting out a room without that money being liable to income tax, PRSI or the universal social charge.
However, the Revenue said this week that short term lets, such as those provided through Airbnb, did not qualify.
Many Airbnb hosts have said they believed they were exempt from tax and expressed concern after it emerged Airbnb was providing details of earnings to the taxman following a request from Revenue officials.
Despite the assessment by EY, Mr Rigney said the Revenue was entirely satisfied that its interpretation of the law was correct.
"We have had a consistent position all the time. We are still satisfied that is the correct interpretation," he said.
Mr Rigney said it was open to anyone who was unhappy with that interpretation to lodge an appeal, should they be assessed for a tax liability.
He said a challenge could also be taken in the courts if an appeal was not successful.
The official added that it was also open to anyone who felt the rent-a-room tax relief was not wide enough to make submissions to the Department of Finance.
The TaxAssist Accountants firm said it had been "inundated with panicked calls" in connection with the issue.
Its marketing director, Alison McGinley, said: "We usually field approximately a hundred calls a week at this time of year.
"This week that number has doubled. Since the announcement from Revenue on Airbnb we have been inundated with calls from people using the site.
"It is not just Airbnb hosts though. We are also getting calls from people renting out a room in their home to students.
"The announcement has caused panic and confusion as people are worried they are going to face massive tax bills."
Responding to these comments, Mr Rigney said: "We are concerned that people are upset and genuinely fearful."
However, he said the Revenue had an expectation that people earning income from renting out rooms would inform and educate themselves about their tax liabilities.