After consulting with the accountancy firm Ernst & Young (EY), Airbnb has stated that due to the legal clarity of what defines someone as being eligible for the rent-a-room tax relief, its renters shouldn’t have to pay tax.
Earlier this week, Airbnb was informed by the Revenue Commissioners that its clients or ‘hosts’ who rent out accommodation on a short-term basis will now be asked to pay income tax going back to 1 May 2014 and asked the company to hand over details of its earnings.
However, its hosts and the company itself were arguing that they shouldn’t have to pay income tax on their short-term lettings because of the rent-a-room relief scheme, which allows people to earn up to €12,000 a year from renting a room in their home tax-free.
Revenue had then countered this claim by saying that as these hosts are offering the rooms largely to holidaymakers, it did not fall under the category of rental accommodation.
Now it appears, according to the The Irish Times, that, with the backing of EY, Airbnb is claiming that the legal wording of what constitutes ‘residential accommodation’ in the Taxes Consolidated Act 1997 is not defined.
Law not in step with modern society
Essentially, Airbnb’s argument is that the nearly 20-year-old government mandate is not in-step with the concept of online, short-term accommodation and EY’s consultation even quotes English case law dismissing Revenue’s claims of there being a length-of-time factor.
Airbnb has stated, however, that it does not intend to fight any legal battles on behalf of its hosts, but is rather offering them the chance to defend themselves before Revenue if they wish to argue their cases.
Meanwhile, Revenue continues to maintain its position that Airbnb lettings do not fall under the rent-a-room relief scheme as they are not offering rental accommodation, just guest accommodation.
Dublin houses image via Shutterstock
Buy your tickets now!