Sunday 22 April 2018

Airbnb... when the taxman comes to stay

Revenue comes home


Joe O'Shea

Ireland's Airbnb hosts are about to get an unwelcome visitor - the taxman.

The online hospitality company has contacted thousands of households around the country to say it will be supplying the Revenue Commissioners with details of income generated by users in the Republic going back to May 1, 2014.

And the company, which has its Euro HQ in Dublin, will also give Revenue the dates on which people first registered their properties, allowing for the assessment of outstanding back taxes.

Airbnb held a meeting in Dublin this week to explain the situation to around 200 hosts who rent out their properties (in many cases, spare rooms) via the globally successful site.

And anybody visiting the site from Ireland is now greeted first with an "Updated Terms of Service" page, warning (in capitals): "HOSTS SHOULD REVIEW LOCAL LAWS BEFORE LISTING A SPACE ON AIRBNB".

Many hosts had believed they were covered under the Government's rent-a-room scheme, which allows people to earn up to €12,000 tax-free a year.

However, Revenue clarified the situation as far back as February this year, signalling that lets to short-term guests, "including where such accommodation is provided through online accommodation booking sites", did not qualify for this form of tax relief.

The news that the taxman now has access to the Airbnb database - and demands for back taxes could follow - has come as a shock to people like Abby, who occasionally rents out her small terraced house in Dublin's north inner city.

"I thought I was fine under the rules on renting out a spare room," she says.

"Now the Revenue is going to go right back to when I first registered. I've been using it to help pay my mortgage - sometimes it's been the difference between paying it that month or not. And I know people who lost their jobs in the crash or are really struggling and have been relying on it for their only income.

"Does the Government want people to get into arrears on their mortgages to pay this bit of tax, when most thought they would be fine under the spare-room exemption?"

Abby says she now plans to ­deregister from Airbnb.

"It's just not worth it. I only rented out the house for a bit of extra cash when I was away on work. I don't want to get into trouble with the Revenue. I'm dreading a demand for back-taxes now".

Airbnb's little trouble with the Irish taxman is just the latest in a series of set-backs from the company, which is facing a range of challenges from local and national governments in many countries around the world.

In most of its most popular city destinations those renting out holiday accommodation are expected to pay tax on short-term letting income.

The company has recently been involved in disputes with local governments in cities including Berlin, New York, San Francisco, and Barcelona.

In Berlin - where Airbnb has been blamed for increasing rents - city officials have brought in a new housing law banning regular short-term letting of rooms without permission from the authorities, a move that could have a big impact on the number of Airbnb hosts in the city.

In Barcelona, the company was earlier this year fined €30,000 for breaching local laws. And it appears this was only the first shot in a campaign by the Catalan government to curb Airbnb's growing power - or at least tax the huge income it generates.

In New York, Airbnb is currently in the middle of a prolonged legal dispute with the attorney general on a range of issues, while similar crackdowns are happening in San Francisco, New Orleans, Malibu and other US cities.

And worldwide, the hotel industry - worried by predictions Airbnb will take an estimated 10pc bite out of profits by 2016 - has been fighting back with all means available.

However, not all city authorities have reacted with lawyers and legislation to the rise of Airbnb. In February, as Ireland's Revenue Commissioners were warning of tax liabilities for hosts, ­Amsterdam became the first city to pass an "Airbnb-friendly law". New ­legislation was created that permits residents to rent out their homes for up to two months of the year to up to four people at a time.

But Amsterdam will be no utopia for hosts - they will have to pay the relevant taxes, including a tourist tax.

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