Finance Ministry plans a fee for Airbnb

A proposal would make all accommodation providers pay a standard fee per day

The Finance Ministry (MF) has proposed merging the fee for accommodation with the recreational and spa fees into one paid by all short-term housing providers. The proposal still has a long way to go before it gets final approval.

What is new is that it affects everyone who offers a short stay, regardless of the place of accommodation or its purpose. This merged fee would affect both standard hotels and occasional landlords such as those who use the Airbnb platform or similar online services.

The current rules for accommodation fees were created before services like Airbnb existed, and do not specifically take them into account.

College dorms, social and charitable housing, and health facilities would be exempt if they do not function as hotels.

For every day of accommodation, a maximum of Kč 21 would apply as early as January 2020. The next year, the fee would rise to a maximum of Kč 50. The specific amount of the fee can be adjusted by each municipality or village, but cannot exceed the maximum.

"Operators offering Airbnb accommodation have an advantage over hotels or guesthouses because they do not have to reflect local accommodation fees in their final cost. The new fee will apply to the provision of paid accommodation irrespective of whether or not the accommodation is approved as an accommodation facility, and it will remove this inequality. It is another of the mosaic of measures by the Ministry of Finance responding to the phenomenon of the shared economy and the related changes in the established business models,” Finance Minister Alena Schillerová (ANO) said in a ministry statement.

“A similar step was seen in the recent government agreement with Uber calling for drivers using this platform to voluntarily register sales, and the company will provide the tax office with the necessary data on individual transactions,” she added.

Hotel operators welcome the idea, according to the ministry statement. “We are convinced that the obligation to pay taxes properly on realized sales is a minimal and entirely legitimate requirement. That is why we welcome this initiative from the Ministry of Finance,” Hotel and Restaurant Association president Václav Stárek said.

The move by the Finance Ministry is in reaction to Prague's rapidly expanding business with renting apartments via online services. Thousands of flats in Prague are available via online services. Both city and state officials say that the fees and taxes now often are not paid.

With the new rule, Prague could earn up to 50 million crowns a year, which has not been receiving due to the legal gray area around the shared economy. Landlords claim it is just casual income, but many people now rent out dozens of apartments and use shared flats as their main source of income.

“We have heard the wishes of many mayors with whom I have had an opportunity to meet lately. Short-term accommodation services are by far not only for tourists. And, as the shared economy in the housing sector is dynamically developing, there are also increasing demands on municipalities that have to clean up, dispose of waste or subsidize public transport from their budgets. With this amendment, we offer communities options for securing the funding of their public services,” Minister Schillerová said.

People using Airbnb in Prague spend some Kč 2.1 billion per year, while hotels take in about Kč 8.1 billion. One average hosts rent for 42 days per year and earn about Kč 40,000, according to Airbnb figures. Airbnb now accounts for about 48.2 percent of the accommodation market in Prague.

Other cities in Europe are also looking at ways to regulate Airbnb. People in Berlin can only rent out part of a flat they actually live in. Madrid and Amsterdam set limits on how many days per year a flat can be rented out.

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