This is a guide and Airbnb Tax. Airbnb is a two-way, community-based online marketplace that helps connect travelers with local hosts. What started out as a problem for their founders when they couldn’t pay rent turned into a big deal. They created a simple website with a map offering “mattresses and homemade breakfast.” As more and more people started pouring in, they improved the website with money they made selling cereal boxes during the 2008 presidential campaign! This simple idea then led to one of the biggest startups in history.
Tax implication of Airbnb
The UK Department of Taxes and Duties reminds that trading on online auctions and renting out your apartment or house through Airbnb are classified as income tax. The deadline for declaring income in electronic form and paying tax, regardless of the form of filing the declaration, expires on January 31, and the tax service has the tools to find those who received income via the Internet but did not want to account for it to the state. HMRC has received new software that allows it to track the commercial activity of individuals on sites like eBay, Etsy and Airbnb and compare it with the data of the submitted declarations (or the absence of these declarations). As a result, even for a one-time sale of homemade brooches or personally brewed jam, an “online entrepreneur” can receive a notice of a £ 100 fine.
Tax investigation on Airbnb income
The Royal United Kingdom Revenue and Customs Service (HMRC) has made repeated inquiries regarding Airbnb UK Limited tax deductions and Airbnb’s internal transactions and is investigating the company, which could result in criminal prosecution. This became known from the reports of the British division of Airbnb, provided by the HMRC last week.
The authorities of many countries, including the UK, have repeatedly expressed dissatisfaction with the way the rental and rental service pays taxes. For example, last year, French Finance Minister Bruno Le Mer criticized the tax policy of the service, after he paid “only € 100 thousand.” tax deductions, earning, according to the minister, in 2016 “tens of millions of euros”.
At the end of the same 2016, Airbnb paid only £ 188 thousand in UK taxes, while the revenue from the rental of apartments received by British landlords exceeded £ 650 million during this period. The fact is that almost all of its profits from operations in the UK conducts through Ireland, even though there are two British branches. This allows the service to significantly save on tax deductions. And it was these internal transfers that piqued the interest of the UK Revenue Service.