11/08/17

Airbnb faces EU clampdown for not paying 'fair share' of tax

France and Germany spearhead new European Union fight to force home-sharing platforms to pay more tax in the right national domain, reports The Guardian.

EU finance ministers will discuss how to force home-sharing platforms such as Airbnb to pay their fair share of taxes and in the right tax domains next month after the French minister for the economy described the current situation as “unacceptable”.

The European commission announced on Thursday that a joint proposal from France and Germany would be discussed at a meeting in Tallinn, Estonia, on 16 September. Brussels will also advise on how best to deal with the so-called sharing economy, in which Airbnb is a major player.

It was revealed this week that Airbnb paid less than €100,000 (£90,336) in French taxes last year, despite the country being the room-booking firm’s second-biggest market after the US.

In response, the French economy minister, Bruno Le Maire, informed the national assembly that the EU’s Franco-German axis would be proposing a pan-European clampdown. “These digital platforms make tens of millions of sales and the French treasury gets a few tens of thousands,” the minister said, adding that the current setup was “unacceptable”.

Le Maire further claimed in parliament that an ongoing consultation being led by the commission and the OECD to address the tax question were “taking too much time, it’s all too complicated”. Many digital platforms operating in the EU have a base in Ireland, including Airbnb, where they can exploit a low corporation tax regime. Le Maire said: “Everybody has to pay a fair contribution.”

In Brussels, a commission spokeswoman, Vanessa Mock, told reporters that the issue was sensitive as any reforms needed agreement from all member states. “Tax is complicated and it is a unanimity issue and that’s why we can’t necessarily race into a new area like this without reflecting on the best approach to taxing a digitalised economy ... It’s essential we maintain a level playing field,” she said.

Mock added that developments in the field of the sharing economy would be looked at “very closely” and that Brussels would bring its own ideas to the table.

Airbnb insists that it does not make “important, long-term business decisions on the basis of taxation” and that it follows rules and pays all the tax it owes in the places it does business. The platform, whose headquarters is in San Francisco, contends that the overwhelming amount of money generated by Airbnb stays with hosts and their communities.

A spokesperson said: “We follow the rules and pay all the tax we owe in the places we do business. Our France office provides marketing services and pays all applicable taxes, including VAT. The Airbnb model is unique and boosted the French economy by €6.5bn last year alone. It empowers regular people, boosts local communities and is subject to local tax. It also makes Airbnb fundamentally different to companies that take large sums of money out of the places they do business.”

However, the company has endured a difficult summer in the face of growing antipathy towards its business model in popular tourist destinations across Europe, in particular Spain, for causing an influx of holidaymakers at certain locations and making it more difficult for traditional hotels.

Paris city council has already voted to make it mandatory from 1 December to obtain a registration number from the town hall before posting an advertisement for a short-term rental on its website.

The ruling potentially makes it harder for property owners using Airbnb to exceed the 120 days a year legal rental limit for a main residence, and easier for the authorities to collect local taxes.

In Barcelona, where tensions have been rising for years over the surge in visitors, the impact of sites such as Airbnb on the local housing market has led to anti-tourist protests. In Mallorca and San Sebastián, an anti-tourism march is being planned for 17 August to coincide with Semana Grande, a major festival of Basque culture.

In Ibiza, the authorities are placing a cap on the number of beds for tourists. Owners will also be banned from renting their homes, or rooms within them, via websites such as Airbnb and Homeaway unless they obtain a licence. Owners face fines of up to €400,000 if they break the law. The websites face the same fine for letting people advertise without a valid licence number.