After much confusion, a senior member of the Revenue Commissioners has confirmed it will not seek to prosecute Airbnb hosts over unpaid income tax after the Revenue was inundated with ‘panicked phone calls’ from hosts.
Over the past week, Airbnb hosts have been left confused and fearful of being hit by an income tax bill after Revenue claimed that hosts who rent out their rooms to holidaymakers would have to pay tax on any income earned.
This was despite arguments by Airbnb, with assistance from the accountancy firm Ernst & Young (EY), that its hosts would be eligible to avail of the rent-a-room relief scheme, which allows people to earn €12,000 per year tax-free by renting out a room in their home.
Now, according to the Irish Independent, Revenue are engaging in something of a climbdown, with Revenue’s assistant secretary in its planning division, Declan Rigney, saying that it will not be seeking to prosecute hosts because it doesn’t believe it will uncover evidence of large-scale tax evasion.
However, he did say that Revenue would be seeking to recover tax arrears and unpaid interest from Airbnb hosts who had failed to pay tax, but it doesn’t plan to pursue any prosecutions.
Aside from frantic phone calls made to Revenue’s helpline number, Airbnb hosts have held meetings within Airbnb’s offices to discuss what their strategy would be should they be hit by a hefty income tax bill.
Confusion reigns, not just with Airbnb hosts
Commenting on EY and Airbnb’s statement that the vagueness of the law meant that Airbnb hosts fell under the rent-a-room scheme, Rigney said that he still believed Revenue’s interpretation of the law was accurate.
“We have had a consistent position all the time. We are still satisfied that is the correct interpretation,” he said.
If someone is challenged to pay income tax for their Airbnb hosting, Rigney said that, if they so wish, they may make an appeal, which if unsuccessful could be defended once again in court.
He added that Revenue had an expectation that those renting rooms in their homes would educate themselves about their tax liabilities.
Meanwhile, TaxAssist Accountants’ marketing director, Alison McGinley, said that it has been inundated with calls, not just from Airbnb hosts but also others who are also renting out rooms independently.
“It is not just Airbnb hosts though. We are also getting calls from people renting out a room in their home to students,” McGinley said.
“The announcement has caused panic and confusion as people are worried they are going to face massive tax bills.”
Rented room image via Shutterstock
Updated 11am, 14 August 2015: This article was updated to reflect the fact that, while Airbnb will not be seeking to prosecute hosts, it will be seeking to recover unpaid tax and interest.