Plans to tax Airbnb, Uber stutter

Airbnb this week struck a €567m deal to settle its tax affairs in Italy – but progress in taxing online rentals across the EU is seeing bumpier progress.

Brussels wants to make Airbnb-style accommodation providers and ride-sharing apps such as Uber collect value-added tax (VAT) on behalf of their clients.

Short-term rentals currently account for around a quarter of the European Union’s tourist accommodation, and the EU’s move could see prices hiked by as much as 25%.

The EU says it wants equal treatment between traditional services like hotels and taxis and online newcomers, but its plans are opposed by industry, and the bloc’s own members.

Into the fold

The EU is on a long-running campaign to bring new big tech business models into the fold of existing regulation.

One recently agreed law sets social conditions for platform workers, clarifying – for example – when Uber drivers are entitled to perks like paid holidays.

But tax poses a particular problem in the online age, since it often relies on a company having physical offices – and more conventional rivals are fed up with what they see as unfair competition.

“I don’t target any particular platform, but everyone has to respect the rules that are in effect,” including tax law, Rodolphe Van Weyenbergh, secretary general of the Brussels Hotel Association, told Euronews.

Last year the European Commission proposed to fix that problem – by making Airbnb and Uber liable for the VAT themselves, rather than having millions of low-earning drivers and accommodation providers register separately.

Pushback

That plan has, perhaps predictably, met with pushback.

“We question the rationale of the proposal,” Viktorija Molnar, acting secretary general of the European Holiday Homes Association, told Euronews, saying that online platforms cater to particular groups such as families. “Short-term rentals are not the same as hotels.”

EU plans “didn’t take these complexities into account” for a sector with multiple different business models, added Molnar, whose organisation’s members include Airbnb, Expedia’s Vrbo, and a host of national associations.

Though officials may have had the big beasts in mind, she believes the EU tax plans concern as many as 2,500 different platforms, and will “actually kill” the smaller ones.

There’s a similar reaction from other sectors affected.

The Commission plan is “untrue, unfair and discriminating against ride-hailing platforms,” Bolt’s Senior Head of EU Public Policy Aurélien Pozzana told Euronews. “The whole reasoning of the Commission is based on the wrong assumption …. it’s creating inequality where there was none before.”

Officials got their maths wrong, because even when they use traditional phone booking or street hailing, low-earning self-employed taxi drivers don’t pay VAT either, he says.

More worrying for the Commission, that scepticism is mirrored among the EU’s own member states – any one of whom could veto the proposals.

Danish economy minister Stephanie Lose has fretted that the new law could cover the summerhouses that are popular retreats for many Copenhagen-dwellers. The government of Estonia, where Bolt is headquartered, also shares its concerns about market distortions.

That’s led Spain – which currently chairs intergovernmental EU talks – to abandon efforts to finalise the law, which will now be discussed under the Belgian Council presidency next year.

In the meantime, national measures intended to recoup taxes from internet giants are proving hard to enforce.

Airbnb agreed on its Italian payout only after issuing a legal challenge. In the region of Brussels, too, the company quibbled with a tourist tax, saying it breached its right to freely provide services across the EU bloc.

Belgian and EU courts ultimately quashed those arguments – and Airbnb says it has now paid fines, and shares income data with the tax authorities.