7 Secrets proving why our Government has to tax Uber & Airbnb (not its Drivers & Hosts)

Regulations/Tax Issues
1

Hi Everyone,

My name is Dany Papineau and an Airbnb Host from Quebec, Canada.

I have just written a blog article entitled “7 Secrets showing why our Government has to tax Uber & Airbnb (not its Drivers & Hosts)” and I think many Airbnb Hosts around the world have a lot to learn from my story.

In February 2015, I made it known that I had generated more than $200,000 on Airbnb. With this experience I’ve created a course, AirbnbSecrets.com, where for a nominal fee I offer tips and share my Airbnb knowledge with users of this platform.

Having always declared all of my Airbnb income, I never feared making such a public statement. Having already paid all taxes on my Airbnb revenue I did not expect the Quebec government to visit with a non-payment of “hotel & sales taxes” bill.

In Quebec, these taxes represent approximately 19% of all transactions on Airbnb, while on a web platform like Uber, is 15%

Even though both Uber and Airbnb collect all payments from their clients which they keep secure in tax-free havens, they still have not made an agreement with our government to collect any income or sales tax. Therefor the government is currently holding the user (Uber Driver or Airbnb Host) responsible for paying Uber and Airbnb’s applicable sales tax.

This means that even though I’ve submitted proof that the tax collection responsibility belongs to Airbnb, not to Hosts like me, I am still forced to make arrangements with my government to pay a back-tax bill of more than $62,000 for my transactions between 2013 and 2015.

This situation affects thousands of Airbnb Hosts across our country. There are many grey areas in this fiscal matter and although I have spoken with the highest ranking employees at Airbnb to ask for legal support, they have suggested I hire my own lawyer.

Lawyer’s fees are currently estimated at $50,000

There are more than 5000 Airbnb Hosts and 8000 Uber drivers in Quebec alone affected by this case. These numbers show that there are thousands of Canadians facing, or are soon to face, the exact same tax issue I am burdened with today.

I am contesting this tax bill and I am launching a crowdfunding campaign to help fund my legal battle. This fiscal debate will benefit tens of thousands of Canadian Airbnb Hosts for years to come. – Click here to contribute –

I would like to thank you for contributing to this cause and I invite you to share this campaign and blog post with our fellow Airbnb Hosts that could be affected directly or indirectly by this issue.

Sincerely,

Dany Papineau
airbnbsecrets.com

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I remember your posts from earlier this year, Dany. I offer my sympathies for the tax problem. Really sorry to hear it. :((

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Robert you can see all the irony that you want in this case but what is at stake here is way bigger then the taxation of Dany Papineau & Airbnb.

This an entire society debate on how governments should collect sales taxes on internet transactions.

Currently, most governments in the world haven’t made any taxing agreements with platforms like Uber and Airbnb to collect these sales taxes. And Québec is probably the most “hard core” government of all provinces in Canada. I am coming out publicly with this issue to bring awareness to this taxation matter because most Hosts have no idea of the information I am sharing in the blog article “7 Secrets proving why our Government has to tax Uber & Airbnb (not its Drivers & Hosts)”.

Why do you think Airbnb had to pay millions in sales taxes in San Francisco in the name of all Hosts?

Why do you think States like Florida are suing Airbnb (not the Hosts) for not collecting sales taxes on their platform?

Why do you think VRBO and Homeway are not forced to collect sales taxes on their platform in the US (winning their case in federal court)?

The answer is very easy: Because Airbnb (and Uber) collect all payments of their users, this is what forces them legally to collect theses taxes.

To my awareness, none of my students have been affected by this case (I always tell my students to hire a local accountant and verify with their own governments for taxation matter). The only reason why my governments has jumped on me is that I’ve become very public about being a Host while many Hosts are very secret about the fact that they are hosting, fearing exactly what is happening to me.

But there is no fear to have because together we have a voice.

And we all have something to learn here :

In taxation matter, the interests of the Hosts can be very different then the interests of Airbnb.

All Hosts have something to gain from wining this case and our actions (or inactions) are laying a path for generations to come.

By the way, I’m not begging for money to pay my tax bill, I’ve already taken care of that. I’m asking for donations to help pay the lawyers fees of $50,000 because if we win this case, this will benefit all Hosts and Uber drivers of Canada, possibly even having an impact on other similar taxation debates in other countries worldwide.

And please do not feel sorry for me. My only goal is to bring awareness about this taxation issue to the entire Airbnb community so that we can all benefit from this information.

Best,

Dany

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Not only can I write but I can also talk.

I have done my research and all taxation matter is in a grey zone right now (in Canada anyways) because fiscal laws have been written before the invention of the internet. And the very fact that Airbnb manages all payments (from a tax haven) has a huge impact in this entire taxation debate.

Also, please know that Uber has similar disclaimer on their platform stating that all Uber drivers are considered self-employees. In the meantime, an Uber driver just won a case against Uber and has been reclassified as an employee in California which is triggering a massive group suing from drivers this state to reclassify all drivers as employee so that Uber would pay their expenses.

http://uberlawsuit.com

Airbnb has the exact same business model as Uber. So what are we as Hosts? Employees? Self-employed workers? Or a mix of both? All I know is that if you are considered and employee, the employer has to collects all taxes applicable to the industry in which the employer operates.

The truth is that the internet has changed our world and many laws need to be re-written and revised accordingly and this is what this entire debate is all about.

Instead of trying to prove me wrong, you should be happy that I am bringing awareness to this issue because I could have easily chosen to remain quiet about this. Instead, I am being public about it because I truly think that my case can bring awareness on this issue for all Hosts.

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Dany, you are right, It most DEFINITELY is a grey zone. I’ve heard Air claim it is just the facilitator, and not the agent. A facilitator like eBay. ebay doesn’t collect tax from the customers. The sellers do, if necessary. In some states, Air is collecting tax and remitting it supposedly on your behalf. We have heard sometimes they do this as one big enmasse payment, and do not “credit” the individual host, which is a problem. The issue is not really sorted out at all, and seems to be one thing for one state and another thing for another state. So yes, you are right, this is a grey area.

But to protect ourselves until it is sorted out, we all need to collect and remit the proper taxes. I was already doing this as a writer (collecting excise on my services) and know that any business in Hawaii–whether you are a dentist, grocery store, hairdresser, AirbnB or coconut sales by the side of the road–has to collect and remit excise tax. In addition to excise, we also have TAT, applicable to any rental under 180 days. It’s a whopping 13.45% total.

Because I get it from the guest, it’s not out of my pocket.

I am sure that if you had to do it over, you’d have collected tax from your guests. You must know something about doing AirBnB if you’ve done $200K in bookings so I give you credit. But tax problems suck no matter how much you think AirBnB or the government or whomever is wrong, and you really have my sympathies. :frowning:

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Well, obviously that is what most experienced businesspeople would do, Robert. But remember, Air BnB makes every Tom, Dick and Harry into an instant small hotel or B&B. Just like ebay made many of us (briefly) into an online storefront. I guess I should have collected taxes for the Ironman memorabilia I sold online on eBay. Yet taxes were never mentioned by anyone at anytime at eBay and I don’t know a single regular joe who sold their kids’ clothes or collectibles on eBay and collected tax. Absurd.

And I see Amazon is still not collecting excise tax for shipments to Hawaii!!!

In general most new Air hosts just open an account, buy some linens, towels and pillows and start sharing their home. They don’t even “think” about the tax part of it, and in my opinion, Air does not do a strong enough job in warning them about the tax responsibilities. I disagree. It has been a GREY area. It’s a grey area if people are confused.

Why are different states doing different things if it’s abundantly clear?

I think that Dany was doing raking in enough with his AriBnB that he should have known to collect tax. I’m sure he wishes he could do it over, collect the tax and not be in such hot water that he would have to start a GoFundMe for his tax problem. I think that’s why he’s saying hosts can learn from his mistake.

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11

As far as being employees, it’s clear that airbnb hosts are not. Airbnb does not direct how or when we do our work. They put us in touch with people who want to rent places and we accept them or not, and we control everything about the process.

Airbnb has messed up because they have not handled the taxes consistently, and it’s a huge pain, and needs to be worked out immediately. People searching for listing in the DC area will compare per-night prices between me and a property in the District, but the property in the District has taxes added but mine does not. If I rolled taxes into my price, not only do I pay taxes on my taxes, but I can’t compete in price. Meanwhile, I had a guest who had stayed in an airbnb in San Francisco where her taxes were added, but she had to pay her taxes here in cash. It confuses the guests and makes airbnb look like a doofus.

That all being said, Kona is right, Air makes it way, way, way to easy for hosts to get started and not have a clue. We did that - we didn’t consider insurance or tax issues.

However, though I’m not very savvy or business minded, I did look into my local laws and found out that any rentals less than 90 days are considered short-term and subject to sales as well as occupancy taxes. I’ve been inspected by my county, been advised by the health board what I can and can not serve for breakfast, (spoiler alert: don’t crack the egg) and paid business license and insurance fees. It was stressful and a bit scary having to do it after having a calendar full of bookings, but we figured it out.

So the only gray issue happens because airbnb makes it to easy for hosts to get in and get in trouble. But if you’re making income, it’s going to be taxed. If you’re making an income with property, it needs a business insurance policy.

If you buy a shirt from your local retailer, the local retailer has to collect and submit your sales tax - not the wholesaler that sold the retailer your shirt. In this case airbnb is acting like a wholesaler. We are the independent retailer.

This will be an interesting year for us all. Personally I’m not taking any bookings as of the date our business insurance renews. I’m waiting to see what happens.

And, collecting and remitting all sales, occupancy, and income taxes…

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I have all my city permits & insurance to operate legally. My Airbnb income has always been 100% declared and I’ve paid all my taxes on this income.

The problem is not there.

The problem is that when billionaire corporations like McDonalds and Starbucks sell products in Canada, they pay sales taxes on all their transactions because they operated from brick and mortar businesses.

In the meantime, both Uber and Airbnb operate on our territory from tax havens meaning that our government is not collecting any income tax on their transactions AND no sales taxes. Uber is currently in big trouble in Quebec exactly because of this taxation issue. Our government is forcing Uber to open their accounting books to them because Uber has an office in Quebec. In the meantime, Airbnb has no office in Quebec so the government jumps on Hosts (instead of jumping on Airbnb) to try to collect theses taxes.

Again, this taxation issue is even bigger then taxing Uber and Airbnb.

It’s a taxation issue about how to tax all internet platforms.

That is the core of the issue because trust me, if Airbnb was based in Quebec, not San Francisco, it would have been long time since our government would have visited them for non payment of these taxes, simply because Airbnb collects all payments.

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Dany, yikes… do you not own the home you were renting on Air??

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Yes Kona, I own my homes and yes the taxation of Ebay and Amazon could also fall under this taxation debate.

Robert, if you are jealous of people that have started their Airbnb online courses and that are kindly sharing their Airbnb knowledge to help other Hosts (there are many), I suggest you to start your own course because it sounds like you know a lot about “how to give great advice on Airbnb insurance, taxation & law”.

For your information, I am not suing anyone and I have never sued anyone in my life.

In Quebec, in taxation matter, there’s a process called “opposition”. When citizens and businesses are not agreeing with a tax bill they can oppose to it. That’s something very normal and that’s the process we are following and there are lawyer fees involved with that, in my case about 50k.

The problem with people like you Robert is that if I win, even if this would create a precedent that could protect many of us, someone like you would never recognize all the efforts and energy I have put in this case to do this for the group.

And if I loose, you’ll be the first one trying to ridicule me.

Good for you because you know what: I DO NOT CARE.

I’m not doing this for you.

My real motivation is not even to do this for me.

What truly motivates me is doing this for us.

There are 5000 Airbnb Hosts and 8000 Uber drivers in Quebec. And there’s tens of thousands more in Canada and we are all affected by this taxation issue that no one is currently talking about, not even Airbnb.

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Well geeze Robert you sound so angry. Give the guy a break. He’s not even in the U.S. He’s describing thorny issues that affect a lot of people. There are hotly debated tax topics between professionals of every stripe as we speak regarding this sharing economy stuff. It’s new territory for hosts and many municipalities, some of whom say the whole damn thing (Air, Uber, all of it) is illegal in their areas.

You remind me of someone… I’m trying to think of who…?

2 Likes
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Don’t you think he’s suffered enough? You’re kicking the guy when he’s down.

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I don’t know what’s your problem Robert but:

1- How can you judge my course when you havent taken it?

2- Have you read my blog article?

Because again, here are the facts I am exposing in it:

Following the legalization of Airbnb in San Francisco (in October 2014), even if your dear “small text” appearing on the Airbnb website says that all Hosts are responsible to pay short term taxes, this event happened:

Airbnb pays tax bill of 'tens of millions’ to S.F. (in the name of all Hosts)

Why did Airbnb do that?

For fun?

Nope.

Because Airbnb collects payments of all Hosts holding the company responsible to pay these taxes in front of the law, not the Hosts

Even more. At the same time, the “Airbnb law” of the city of San Francisco had forced both Homeway an VRBO to collect theses taxes. Homeway had to go to Federal court to overrule the unfair tax law and to prove they were not responsible to pay or collect theses taxes simply because Homeway doesn’t collect payments of their Hosts.

HomeAway, like some U.S. cities, has an Airbnb problem

So my questions are:

If this is not called a grey zone in taxation matter, what is it called?

How do you know so much about all the nuances of taxation laws in Canada?

Based on this, can’t we assume that there is a lot of material up for debate in the taxation of any web platform that collects all payments for all its users?

The truth is that I’m not blaming Airbnb : I am blaming my government for going after the wrong group of people.

If they want to collect sales taxes seriously on this platform, I am telling them that they have to sit face to face with Airbnb instead of harassing the Hosts, that’s all.

1 Like
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Hi Dany,

Appreciate your perspective on Airbnb.

Can you give any information on where I can start to apply for my permit? I have a triplex in the Plateau. Appreciate it! Thanks,

J

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Call the city (your arrondissement) and ask if your address has a zoning that allows short term rental. That’s the start of it all. If so, then call CITQ to apply for a permit. They will direct you into this process…

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I hate to say this but as a Canadian Robert is right. There are ways to claim short term rentals on your taxes here the problem being is Dany is/was renting so many units that he actually was technically running a chain of hotels because of the number of rooms he rented out hence the tax bill. Don’t feel sorry for him, he is trying to play the system. It’s in the news and while I don’t have all the information AirBNB isn’t really the enemy here.

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@melmo I don’t need you to feel sorry for me. The Quebec government has already jumped on Uber here to collect sales taxes, not on Uber drivers, because as long as governments don’T collect taxes on internet platform like Uber and Airbnb, they are creating unfair competition for local businesses. Uber is the Airbnb of taxis and Airbnb is the Uber of Hotels. If you are going to force one platform to collect taxes, you have to apply this principle to all platforms to create a fair business environment for all. Peter Simons, owner of one of the biggest chain store of clothing in Canada called Simon’s has urged our governments to collect sales taxes on all online businesses because the fact that online businesses don’t collect taxes is creating unfair competition for Canadian businesses like his (https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.journaldemontreal.com%2F2016%2F03%2F22%2Fcri-du-cur-de-peter-simons-concernant-le-commerce-de-detail&edit-text=). If you think this taxation case is related to me running 3 units on Airbnb you are a fool and you understand nothing to the taxation debate linked to the digital revolution that our society is currently facing.

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I don’t know about Canada, but in the US, Air has to first gain the approval of the jurisdictions where they hope to collect taxes. In Hawaii this measure passed the legislature last session and was vetoed by the governor. There are so many illegal rentals here that he didn’t want to just give blanket approval…there were still too many holes. So until it’s resubmitted next session, the individual owners are still responsible for collecting their own taxes. Air can’t do it for them if the jurisdictions don’t approve it.