Airbnb Looking Into New Tax Agreements

By Global Tax Weekly

Should innovative new business models adapt to the tax system, or should governments and tax authorities adapt to innovative new business models? I rather think, for the sake of human progress, that, for the most part, the latter should apply. But perhaps we are at risk of allowing the former to happen more and more. This especially seems to be the case in the so-called “sharing economy.”

Take Airbnb for example. It recently announced that by the spring of 2017 it will have the systems in place to remit and collect France’s various local hotel and occupancy taxes in 50 cities. In other words, the company has spent considerable time and effort on a project that is nothing to do with its core business activities, and all to do the French tax authorities’ jobs for them. Of course, the traditional hotel and hospitality industry would soon be up in arms if this uneven playing field were to persist, and I’m not suggesting taxes shouldn’t be paid when they are due. But I posit that avoiding local tourist taxes is not the first thing on most people’s minds when they hire or rent out accommodation in this way. It almost feels as if the authorities think you’re cheating if you spend a few days in someone’s apartment, rather than in a city center hotel at exorbitant rates.

It is perhaps unfair of me to single out France here. Airbnb is doing this worldwide, and intends to have arrangements in place in 700 locations. That’s going to be some feat, but It’s also going to be a necessary one. For Airbnb Chief Executive Brian Chesky revealed in an interview with the Financial Times last year that wherever it has a tax agreement in place, an “existential” threat is removed. My word: it’s coming to something when paying tourist taxes is seen as a matter of life or death!

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