Tax authority cracking down on Airbnb

People who rent out flats to tourists have not been paying all the taxes

The Czech Financial Administration (Finanční správa) has obtained data on people who rent their real estate through Airbnb, an online service that effectively turns flats into short-term hotels.

The administration has also launched an audit to see which of the legal entities including individuals has declared the Airbnb income properly.

Finance Ministry spokesman Filip Běhal said the crackdown is aimed at making people fulfill their tax obligations.

The Financial Administration is not disclosing how it accumulated the data on Airbnb users, as it does not want to help people avoid detection. It said only that is was acquired through its own analytical activity.

The data gathering and the audit are steps at collecting unpaid taxes from the shared economy.

Airbnb hosts are required to pay income tax on the money they collect plus value-added tax (VAT). They are also obligated to follow the Electronic Evidence of Transaction (EET) laws.

In addition, there are local taxes such as spa tax and accommodation tax that towns and cities are also eager to collect. Some 20,000 people are estimated to rent out flats via Airbnb in Prague alone.

The crackdown affects Airbnb hosts across the entire Czech Republic.

In mid-July, the tax authorities reached an agreement with the alternative taxi service Uber so that it provides the tax authorities with data on drivers who make money through it.

Airbnb is based in the US and is active worldwide. Airbnb spokesman Bernard D'heygere denies that the company has agreed to hand over data to the Czech Republic. “National tax authorities have wide powers to get taxpayer data without the assistance of third parties such as Airbnb,” he said.

Airbnb has been operating in the Czech Republic since 2009. Last year Airbnb was used by more than a million people traveling to the Czech Republic, according to estimates.

Last year, the Czech Financial Administration determined that services offering accommodation over the internet are considered as accommodation services and not as rentals, under the tax law.

Daily Hospodářské noviny reported Airbnb has an account with Česká spořitelna in the Czech Republic, from which it pays money to domestic landlords. Česká spořitelna declined to comment on whether the Financial Administration requested information on transactions.

Airbnb has been popular with tourists, but not with residents. Czechs hoping to buy flats complain that people buying flats for short-term rentals has distorted the housing market and driven up prices to the point where flats are no longer affordable.

Residents of buildings where Airbnb flats are located complain of noise, excess water use and excess garbage. Flats meant for two or three people are often overcrowded with more, which puts a strain on the building's plumbing and infrastructure.

Residents also complain of strangers having access to the building, which increases the risk of crime.

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