Denmark is set to become the first country to require Airbnb to report the income of owners to the tax authorities.
The sharing platform welcomed the news, which came as UKHospitality called on the Mayor of London to ensure fairness and transparency regarding the short-term letting of homes, with further legislation mooted in the capital.
In Denmark, tax minister Karsten Lauritzen said that the government wanted a “thriving sharing economy in Denmark. However, it is a prerequisite that there is a piece of control. Therefore, the good news is that it has managed to cooperate with the Airbnb, which means reporting all revenue to the tax administration and thus settling the right tax.”
The government will also simplify income tax and increase the tax free earnings limits for primary homes to DKr28,000 (EUR38,000) and for holiday homes to DKr40,000 for those hosting via platforms that collaborate with the government to support accurate income tax payment. There will only be DKr11,000 in tax-free earnings for users of non-collaborative platforms.
Local authorities will also get new powers that allow them to decide on the number of nights hosts can share their entire primary homes. For hosts renting through platforms that collaborate with the government, to support accurate income tax payment, they will be able to share their home for at least 70 nights a year. Municipalities will be able to increase this up to 100 nights a year. Hosts renting through platforms that do not share data with the government on income tax will only be able to share their homes for 30 nights a year.
The proposal will now be discussed and voted in the Danish Parliament over the next months.
Patrick Robinson, director of public policy EMEA, Airbnb, said: “We believe the proposed rules are right for Denmark and we are committed to ensuring hosts on Airbnb can benefit from these innovative and forward-thinking rules. The progressive attitude of Denmark is an example to the world and demonstrates how positive results can be achieved when policymakers and Airbnb work together on the shared goals of making cities better places to live, work and visit.”
Airbnb said that last year, over 30,000 Danes shared their homes, hosting 900,000 visitors. The typical Airbnb host in Denmark earned an additional DKr5,500 by sharing their space for 23 nights per year.
The proposals came as UKHospitality called for a level-playing field in the light of the publication of the London Housing Strategy, in which Sadiq Kahn said he welcomed the rise of the sharing economy, and supported the right of Londoners to use online lettings sites to rent their homes out for short periods of time, but said that this right needed “to be balanced against the impact that shorter-term lets can have on certain local communities and on the supply of permanent private rented housing”.
The Mayor said that he considered current provisions to regulate short-term lettings in London to be reasonable in principle, “but difficult in practice to enforce adequately” and, while he named Airbnb as having taken steps to ensure its users comply with the 90-day limit, said that, if voluntary measures to improve the operation of the industry proved ineffective, he would consider lobbying government to strengthen relevant regulations.
UKHospitality CEO Kate Nicholls said: “The home-sharing sector has been lauded by politicians recently as an example of ingenuity. We are, however, concerned that it is being exploited contrary to the spirit in which it was established; and in a way which puts it at an unfair competitive advantage against other accommodation providers.
“The Mayor’s report highlights that abuse of short-term lets may have a negative impact on communities and that currently there is no effective way to enforce the 90-day rule. With housing at a premium, particularly in the capital, the use of multiple lets by unscrupulous landlords acting as businesses can surely not be tolerated.
“Flagrant breaking of the rules by landlords to act as a business means that they can avoid the legislative and tax pressures that other accommodation providers must adhere to. Not only does this give them an unfair competitive edge, it puts the safety and security of customers at risk.
“The Mayor’s own report acknowledges there are flaws in the current set-up, so action must be taken to provide transparency and fairness for businesses. We are not calling for the prohibition of the sharing economy, only that it be subject to the same rules and regulations as the hospitality sector.”
HA Perspective [by Katherine Doggrell]: Airbnb has, in recent months, shifted its position in the sharing debate from ‘sharing’s great and it helps pay mortgages, why can’t we all just get along?’, to a slightly more barbed approach.
In its launch as a platform for boutique hotels it wasn’t backwards in coming forwards in its attacks on the hotel sector. It has also laid into its fellow sharing platforms, as well as the OTAs, for going against the restrictions agreed in London and other cities and, frankly, spoiling it for everyone.
It has had some recent victories, most notably in Berlin, which is now a lot more relaxed in its approach, but the city’s residential market is markedly different from those in London, New York or Paris.
The Danish approach is likely to be its most successful and one which many jurisdictions have been pushing for. It comes with the sweetener that those who comply can share for longer. Cities such as New York have been militant in their demands for lists of hosts, but this option may be the one which gets results.