Keep Your Air On




Further to the Airbnb/Revenue tax grab threat.

Karl Flynn writes:

Airbnb have published an ‘opinion’ from Ernst & Young [I’m assuming that’s what “EY” stands for] that suggests Airbnb hosts might after all be covered by the Rent-a-Room Relief Scheme. Looks curiously like grasping at straws, but who am I to question “EY”

Here’s the text of it:

Rent-A-Room Relief: EY Summary of Technical Position

Section 216A of the Taxes Consolidation Act 1997 (“TCA 97”) sets out the conditions for availing of rent-a-room relief from income tax for ‘relevant sums’ of up to €12,000 per annum. The definition of ‘relevant sums’ limits relief to sums received from rooms rented out for the purposes of ‘residential accommodation’.

As the term ‘residential accommodation’ is not defined in TCA 97, it should take its ordinary meaning. Dictionary1 definitions of ‘residential’ and ‘accommodation’ do not refer (either explicitly or implicitly) to a minimum period of occupation for accommodation to come within the parameters of being ‘residential’.

Although there do not appear to be any Irish court cases which consider the definition or application of the term ‘residential accommodation’, there are a number of English court cases which deal with this point.

In the judgement in the case of Owen v Elliott (H M Inspector of Taxes)2, it was stated that “the expression ‘residential accommodation’ does not directly or by association mean premises likely to be occupied as a home. It means living accommodation, by contrast, for example, with office accommodation. I regard as wholly artificial attempts to distinguish between a letting by the owner and a letting to the occupant; and between letting to a lodger and letting to a guest in a board house; and between a letting that is likely to be used by the occupant as his home and one that is not.” Leggatt L.J. further stated that “…it is accepted on behalf of the Crown that the length of the letting is not to be determinative”.

A number of similarities can be seen in the conditions for Irish rent-a-room relief and UK relief from capital gains tax (addressed in Owen v Elliott). In particular, Irish rent-a-room relief applies to all sums arising in respect of the use for the purposes of ‘residential accommodation’, of a room or rooms in a qualifying residence while relief from UK capital gains tax applies to any individual where the dwelling-house in question or any part of it is or has at any time in his period of ownership been wholly or partly let by him as ‘residential accommodation’. As such, the meaning of ‘residential accommodation’ that was deduced in Owen v Elliott should apply for the purposes of Irish rent-a-room relief.

The English cases of Westbrook Dolphin Square Ltd v Friends Life Ltd3 and Urdd Gobatih Cymru v Customs and Excise Comrs4 are also informative and in agreement with our view on the construction of the meaning of the term ‘residential accommodation’ for this purpose.

In summary, in contrast to the position taken in Revenue’s guidance on rent-a-room relief5, Section 216A TCA 97 does not make any distinction on the basis of temporal duration of the ‘use’ nor does it make any distinction between ‘guest accommodation’ and ‘residential accommodation’.

On the basis of the above, it is EY’s view that the term ‘residential accommodation’ in this context should include short-term lettings by Airbnb Ireland’s hosts of a room or rooms in their sole or main residence, and, on this basis, where the relevant conditions are met, rent-a-room relief should be available to Airbnb Ireland’s hosts. EY’s view is supported by the opinion of Senior Counsel.

Airbnb are holding a public meeting at their office in the Watermarque {Bridge Street, Dublin this evening to brief Irish users about the tax and legal implications.


Rent A Room Relief (Airbnb)

Last night: Airtcd

101 thoughts on “Keep Your Air On

    1. Padi

      Revenue are very independent of the Department of Finance so you’re wrong there. Finance write the legislation. Before this was released I really thought Airbnb were throwing their hosts under the bus and not getting good tax advice, great to see they are being proactive on this and not just rolling over. Revenue’s view or guidance is just that a’ view’, it is not law.

      1. Robert

        “Revenue are very independent of the Department of Finance”

        ah dear sweet beautiful innocent Padi :-)

        1. Padi

          Trust me, Finance do not always agree with Revenue and visa versa. From a legislative perspective they are totally separate, just look at how often Revenue lose court cases. Their view is not law (which is written by Finance).

          1. Robert

            Yes, thanks, this is the truth not just theoretically, but also in day to day operation. However the organisations do communicate with one another and a certain amount of “complementarity” is to be expected. To add to this, the drafting of legislation rarely anticipates tricky legal corner-cases (of which this is not one IMHO) and ultimately this kind of interpretation falls to the legal system, which is also subject to direction from the legislature.

  1. Mr. T.

    “there are a number of English court cases which deal with this point.”

    We have our own laws thanks.

    This is an example of how consultants advise wealthy individuals on how to avoid their tax obligations. That’s why state services get cut and then people moan about there not being enough Gardaí to police their areas.

    If you want a properly functioning society, pay your effing taxes.

    1. ollie

      Yet Mr T our TDs and Senators can submit “unvouched expenses” that average around €3,000 a month. They can claim mileage from their place of residence to the Dail. They can use state transport for private functions.
      So, perhaps you could call round to some of them and tell them to pay their effing taxes.

    2. Andyourpointiswhatexactly

      Where there isn’t an Irish precedent, we turn to English law for guidance, often.

      I agree in principle though. It’s income. Pay your tax. There was a girl on Pat Kenny bleating in about the fact they’ve spent all the money they’ve made from Airbnb, doing up the house. As if that was a good argument against paying tax: ‘we’ve spent it already!’. I was irritated by her accent though (talking about going off to ‘fastivals’ etc) so wasn’t sympathetic.

      1. Padi

        Or change the law if you want certain type of income not to fall under the rent-a-room relief. The law is the law, Revenue can’t make up their own.

          1. nige

            capital allowances (which allow you write off capital expenditure over a number of years) don’t apply to residential buildings.

      2. Clampers Outside!

        In fairness, it should not be retro active.

        On the other side of the fairness coin….

        In fairness, those who thought they could run a BNB under the renting a room clause are a bit stupid if they thought that would go on unchecked. The naivety of it all is quite funny, there was one on Morning Ireland too, all “I didn’t know” as well… if you ask me, most of those are pretending to be silly.

        If the govt had any cop, running up to an election, they’d let everyone off past earnings on AirBNB, and give people until, say, Monday to leave, or go legit.

        But then again, FG/L are extremely short sighted and a bit of an Elmer Fudd when it comes to shooting themselves in the foot, and lacking any foresight.

    3. Kieran NYC

      Paid your water charges, T?

      Or does that magically not apply to you because you don’t wanna?

  2. fish

    If Air BnB were to provide the revenue authorities with their members details this would be an infringement of Irish and European Data Protection legislation that states data can only be collected and used for a specified purpose. If when joining Air BnB it is not explicitly stated that the data will be used for providing the Irish Revenue Authorities with information to assist them with gathering tax then the data cannot be legally used for this purpose. Non of which, of course, has ever bothered the govt. in the past.

    1. Robert

      Normally when signing up for these things there’s a clause that says “may be made shared with law enforcement agencies [etc etc]” , I haven’t read the small print in the AirBnB EULA (who does?) but presumably there’s such a clause in there …

    1. doncolleone

      aye, pretty clear but, but of course the moneid leeches of this country hate contributing to anything other than their own back account, will be interesting to see how Enda juggles this one without looking as the total subservient gombeen man that he is.

      1. Vote Rep #1

        ‘moneid leeches’

        My neighbours do it. They and their children stay in their parents houses every so often when people stay. They need to do it to pay their mortgage. Are these the ‘moneid leeches’ you refer to you absolute colostomy bag?

        1. Robert

          If it were the ‘monied leeches’ that were going to be losing out this never would have come to light.

        1. Robert

          Information website is a summary of the law – the point is that you can’t say you weren’t informed on what revenue policy was.

    2. Owen C

      Even more explicit further down that page:

      “Exclusions from rent-a-room relief

      You will not qualify for the relief if:

      You are renting the room to short-term guests”

      1. Owen C

        And from the Revenue’s dedicated note on the Rent-A-Room scheme:

        “Income from the provision of accommodation to occasional visitors for short periods,
        including, for example, where the accommodation is provided through online
        accommodation booking sites, does not qualify for relief as the visitors use the
        accommodation as guest accommodation rather than for residential purposes. Income
        from guest accommodation such as a bed and breakfast or a guesthouse operation is
        generally treated as trading income (Case 1) and not rental income (Case V). This
        type of income, even where it is under the relevant limit, does not qualify for rent-aroom

        1. Seriously

          Surely they can explain it all they want on their website but it’s what’s actually in the legislation that is important.

          Legally the auld “Well what we actually meant here” doesn’t really stand up to scrutiny…

          1. Robert

            But It is the role of the revenue to administer and clarify legislation where appropriate. It’s not exactly an independent body and does operate with a large amount of legal heft. If you don’t like it you can challenge it, take it to the courts etc. In my opinion this is fairly clear cut (which is a pity) and I’d be surprised if such a challenge were successful.

          2. Caroline

            Why do you not think a challenge would be successful? I think the EY opinion is interesting, at least if it’s correct that the matter would turn on the interpretation of ‘residential’. I wonder who would take the case though.

    3. Stewart Curry

      Fair point, this isn’t they actual law. But it can hardly be a shock that the money you earn from AirBnB might be subject to income tax, and that if you were under the assumption that rent-a-room covered it, that you’d do a bit of research on it and maybe put some aside just in case?

  3. Vote Rep #1

    Newstalk had on a lady who was with the revenue who was of the same opinion. She felt that the law was ambiguous and that Revenues was not necessarily the correct reading of it and that it was open to being challenged.

    1. martco

      dunno didn’t hear her but I think it’s fairly straightforward: if you earn money you are liable to tax, no?

      also thinking would the property owner if selling the house on at some point not have to declare details relating to their airbnb activities for CGT purposes? e.g. I want to sell my house, a house which I’ve airbnb’d either in its entirety or some part of over the last 5 years…surely that house or part of now falls outside standard domestic property sales tax rules to some pro-rata extent at least?

      on the airbnb passing info the Revenue…don’t forget airbnb chose our best little country in the world to do business in to base their HQ…because of our compelling educated workforce of course ;) …I doubt they give a fiddlers fck one way or other for Irish based customers

  4. Jo

    I’m more than willing to pay my taxes, in fact I pay loads of them. I’m not some huge landlord looking to dodge anything. I use this to supplement my income and pay my bills.

    I do however take serious umbrage with the tax man deciding retrospectively that I now owe him money. When I signed up to Airbnb I was allowed earn up to a certain amount (not that I ever reached that). I certainly wouldn’t have signed up if I knew I would be handing over 50%.
    It’s very underhand for them to decide that money I earned last year, they are now entitled to it? it’s like saying driving is now illegal and has been for 20 years so everyone who’s driving now owes us fines.

    Could they not have said: from now on we’ll be taking 50% – so it’s up to you if you’d like to continue?
    As it stands I now have a huge tax bill and have lost a source of income.

    I think this will kill the Airbnb market in Ireland. But maybe it’s not worth that much to them?

    1. Vote Rep #1

      I’d be curious to know what sort of lobbying was done by the hotels & b&b lobby groups for this sort of thing. My neighbours were doing to get the extra needed to pay their mortgage. Now they owe a lot of money they probably don’t have. Its pretty bloody harsh

    2. ahyeah

      Wen you signed up, nobody told you you were permitted to earn a certain amount tax free. You assumed it. And it was a stupid assumption. The rent a room relief scheme was introduced to increase the supply of permanent residential accommodation. Your own fault for not properly informing yourself. You earn money, you’re liable for tax. It’s simple. Now pay up, you parasite.

      1. Jo

        Yes. What a parasite I am.
        A bleeding leech on society. A disgrace to humanity.

        They changed the rules. I well informed myself when I signed up. I was told, this wasn’t liable for tax.
        But sure, don’t let that get in the way of a bit of mud slinging there.

        What is it you think I’m earning here? Millions?

        1. ahyeah

          They didn’t change the rules. They issued a clarification in January because it was obvious that a significant number of people were conveniently (and deliberately) misinterpreting a pretty clear allowance. There was no reasonable basis for you to think that the Rent a Room Relief scheme applied to coining it on Airbnb. “I didn’t know…someone else said it…” is utter bollocks. And assuming you’re over the age of 8, it’s a pretty pathetic defense. Pay your taxes.

    3. ollie

      So, if I have an apartment rented and I tell revenue that the tenant is actually living in a room in my primary residence I pay no tax?
      Or if I want to saty within the law and I allow the tenant to live rent free in the apartment and rent a room to his wife or children I pay no tax?

      Happy days!

      1. Robert

        That’s not really too clever – just good old fashioned tax evasion. They have investigators and auditors for that kind of thing and if they catch you you’re boned.

    4. Custo

      They’re entitled to it because it’s undeclared taxable income.

      You don’t have a leg to stand on.

  5. Dermot

    Can someone explain to me where they got the 51% figure from? Also if this is the tax on the users providing the accommodation, what is airbnb themselves paying on their earnings? Why isn’t it simply charged at the normal income tax rate and any other cash grabbing efforts offset on airbnb’s profits?
    It’s clearly an effort by hotel lobbyists and ministers who themselves have investments I. Hotel groups to simply shut down the service.
    If 51% is the figure that stands, it will be 51% of fuck all because everyone will close their account on airbnb and use one of the many alternative short term letting websites.
    Another progressive move by an out of date government.

    1. Robert

      Income Tax – when you go above a certain threshold that’s what you pay. It doesn’t take much to reach that threshold so they’re making a reasonable assumption.

  6. Robert

    This is nothing to do with “EY” or interpretation of law (English law, Irish law or otherwise), the revenue themselves have stated where the boundary lies and that’s that. Civil suits and parliamentary lobbying notwithstanding of course …

    1. nige

      No, it’s not. The Revenue do not get to decide what that law means. If there is ambiguity, then a taxpayer is entitled to read it in a way which does not comply with the Revenue guidance. If the Revenue don’t agree it goes to appeal and from there can go to the High Court or Supreme Court.

        1. nige

          Appeal Commissioner decisions are not published (yet – the legislation will be changing on this soon). However, I know of a case which related to a claim for a capital gains tax relief for farmland where the Revenue lost as the Appeal Commissioner felt that the placing of a particular comma gave the section a different meaning to that which the Revenue (and most tax advisers) believed.

          Of course [redacted] had a long running dispute with the Revenue Commissioners which he won at Appeal and when the Revenue took it to the High Court he won there too.

      1. Robert

        and do you not think their operation is informed by legislators? That’s what civil servants “do” after all …

  7. diddy

    So AirbnB set up their cool funky and fresh business in Ireland with a plan to pay feck all tax like the rest of their mates already here. And their customers here will feel the full wrath of revenue on their little earner. Fair enough, but isnt it a great microcosm of how the big boys pay nothing and the middle class pay everything towards society? and so it goes…

    1. Padi

      I’ve no doubt Airbnb are paying their taxes on their profits. Does a shop have to make sure it’s suppliers are paying their taxes!?

      1. Robert

        Specious example but don’t some types of shop (hardware stores, cash & carry) provide vat discounts if you demonstrate you’re a particular type of customer (tradey or shop for instance)

  8. Owen C

    This is a fairly clear cut case of what is “residential accommodation” (tax exempt up to 12k in this circumstance under rent-a-room) and what is “guest accommodation” (taxable, just like a B&B would be).

    Lets do a poll, Residential or Guest?

    I vote Guest.

    1. martco

      Owen, say I own a trad B&B last 15 years and I decide to get out of the trade sell it on….I assume that’s not a tax-free transaction (in the sense that it’s not solely my primary residence) for me anymore….so I’d have to land out on some CGT too?

      1. Robert

        B&B’s are typically OO though no? That’s my experience … isn’t the non-OO variant called a “guest house” or something?

        1. nige

          Not if the rooms were also used for family purposes – PPR relief applies to your home and the exclusion only applies to that part which was used “exclusively” for the trade. So, if the rooms were not used “exclusively” for the paying guests, then the full relief applies.

          1. ahyeah

            But then, surely (and sorry for being ‘basic’ here), you’d have to argue or show that guestrooms – when vacant – were used by family members?

    1. nige

      With 15k already this year he was never going to be within the rent-a-room scheme anyway. Presuming he has other income to use up his lower rate band, Niall’s tax bill will be in the region of 7.5k.

  9. Pat

    I emailed airbnb office in Ireland a few months ago, seeking clarity on the tax situation. They’d loads of other helpful information – but no reference at all to tax- not even simply to get advice first. They shied away from it completely in their response. But they know from the States that it’s taxable, like other income. They’re hardly surprised that their renters are now in this fine mess! But who gets the tax bill…..not airbnb!

    1. ahyeah

      In fairness, what’s it got to do with Airbnb. It’s essentially just an online listings site. You rent out your space, you make cash and pay them a commission. It’s not their business or concern what you do with the money.

      This is all complete bull$h1t…just pay your fupping taxes.

  10. The Bird in the Box

    Airbnb really isn’t as lucrative or appealing as it initially seems. as well as paying up to 51% tax, regular home insurance typically doesn’t cover you if your property is acting as a guesthouse.

    1. ivan

      And that’s a huge aspect. Say somebody slips in your bathroom and splits their head open, you could end up with a very costly problem…

    2. ahyeah

      So what you do then is take out public liability insurance. All home insurers are very familiar with how Airbnb works now, and some have specific policies. Costs around €200 a year.

  11. smiffy

    Is there any significant difference between AirBnB and a traditional, owner-occupied Bed and Breakfast, other than the use of the website? Do normal Bed and Breakfasts have to be registered? And if those normal ones aren’t covered by the Rent-a-Room scheme (surely someone would have tried that on by now?), why would AirBnB places be any different?

    1. ahyeah

      But nobody told them, don’t you understand? Can’t you see who the real victims are in all of this?

  12. Laurastrux

    Before I began renting out a room in my home via airbnb I went to the revenue offices to check what my responsibilities for tax were. As it most certainly did fall within the rent a room relief scheme back then I went ahead and signed up. Airbnb have regularly stated in their terms updates as well as at sign up that I as host am responsible for knowing what my tax obligations are. I don’t think there was any foul play on the part of airbnb. That they have not been helpful to hosts in understanding the new regulations brought in by revenue at the start of the year has been unimpressive but not unexpected. Revenue have also been unhelpful in clarifying the issue. When the new conditions of the rent a room relief scheme were announced it was difficult to find information on how much tax I would be expected to pay. I unlisted immediately in March but have bookings right through to September I don’t want to dishonour. Airbnb is a good income generator but has a social aspect to it that I have loved. It’s a shame to have to stop as it can really sell neighbourhoods that aren’t generally visited (stoneybatter, Phibsboro for me). It was great while it lasted.

    1. ahyeah

      “As it most certainly did fall within the rent a room relief scheme back”

      No, it didn’t.

  13. Meerz

    When it was clarified earlier in the year in the media (not on Airbnb) there was mention of 23% tax stated on the Airbnb website – which I thought was steep compared to hotels and B&B and even stepper compared to rent a room scheme… now I’m hearing rumours of 40%-51%!!
    I really enjoyed hosting people in our home and my home has taken a battering from it (suitcases scrapping my stairs and walls) and now I potentially owe 51% instead of 23%… it definitely wasn’t worth doing after expenses and rushing home from work and cancelling plans to welcome guests if I owe back 40-51% on it.

      1. Meerz

        23% is the amount they had written on their members area of their website after last March clarification as “a trade”, the information is not there anymore.
        I’m keen to hear the minutes from tonights meeting to find out what the actual percentage is.

        1. ahyeah

          23% is probably the VAT that Airbnb charge you on their service fee – so they levy 23% on their 5% cut (or whatever it is).

  14. Joe

    tis gonna be fun when folk are asked to pay back tax, it’ll be the end of airbnb for lots of folk. We all know who was pushing for airbnb folk to pay taxes, hotel and b&b folk.

  15. Kieran NYC

    Have to laugh at those who would readily lynch DO’B for (legally) not paying his fair share of tax. Blaming him and the multi-nationals for Ireland not being a left-wing utopia with first-world services.

    But when it comes to them, they claim ignorance and it’s only a little amount and sure how dare government tax them anyway!

    You earned money. Pay your taxes on it.

    1. Meerz

      For us we earned money so “pay your taxes” is fine. But to pay 52% and we did laundry, clean the house from top to bottom each time a guest was coming, rush home to greet guests, spend time wiring conversations and giving directions, wear and tear of our home – my hall needs repainted as do my wooden stairs from guests scraping them with luggage, use of our shower and cooker and wifi. We only charged about €40 and all the above happened and now we’ve to pay back 52%. I really hoped it would be a smaller percent to “pay your taxes”.
      Not to mention the many guests that stayed with me put money into the economy – they used buses, taxis, shopped in Dublin 3 shops, ate out and bought alcohol in bars and visited tourist spots. So I have helped the economy already. The high percentage is the sickener – not that we have to pay revenue something. Tourism tax should be applied, not income tax.

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