Finance Ministry Moves To Regulate Airbnb: Sharing Economy Not Paying Fair Share Of TaxesPetr Dubinsky
Airbnb hosts almost half of the entire Prague housing market and has yearly turnover of two billion crowns, most of which go untaxed. The Finance Ministry is taking steps to ensure taxes are paid on those earnings.
The Ministry of Finance has proposed merging the accommodation, recreational and spa taxes into one. Anyone offering a rental for a short stay, regardless of the place of accommodation or purpose, would have to pay the news tax.
The tax change would affect both hoteliers and the occasional landlords utilizing the Airbnb platform. The amendment to the Law on Local Fees was submitted by the Ministry of Finance to committee for review.
For each day of accommodation, a maximum of 21 crowns in taxes would be due. If everything goes as proposed the new fee structure would be implemented as early as January 2020. In the following year, a the maximum fee will rise to 50 crowns per day. Universities, health and spa facilities and premises serving social and charitable purposes will be exempt from the fee if they do not engage in hotel type services.
The Finance Ministries move is in reaction to Airbnb’s explosive growth in Prague. Especially in the center of Prague where thousands of flats are listed on the site and the majority of landlords currently pay no taxes.
Thanks to the new rules, Prague, for example, could bring in up to an additional 50 million crowns a year in tax revenues. Most of which is currently lost due to the legislative gray zone. Many Airbnb landlords argue it is just a casual side business, but the number of big time operators renting dozens of apartments on Airbnb as their primary income continues to grow.
“Landlords offering accommodations on Airbnb currently can offer lower rates because they don’t pay tax providing them with an unfair competitive advantage over hotels. The new tax will apply to all those renting out accommodations thereby removing this inequality” said Finance Minister Alena Schillerová (ANO).
Any municipality can implement the new fee at their desired amount up to the maximum stated rate of 21 crowns per day in 2020.
Prague is not alone in its attempt to reign in Airbnb. Cites across Europe are beginning to regulate the popular online rental website. In Berlin, for example, hosts must live on the property offered for rent and may only rent out a room or two at a time. Madrid and Amsterdam have mandated landlords may only rent their homes for a maximum of 60 to 90 days per year.