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Well how the heck do you know what the guest pays? No one shares that with us.
Why on earth would we pay tax on the total including what the guest pays? I believe you are wrong,
I am talking about excise and accommodations tax. That is what I collect from the guest on my payout.
AirBnB has hidden this quite sneaky.
Look at the right side of your transaction history. There is a link to your gross earnings, this is what you should use for your bookkeeping.
Chris: That is interesting. I agree that Airbnb’s taxation policy is very vague indeed. I was unclear how to handle my air bookings so talked to my accountant about what to do. She told me to put the gross amount in my topline and Airbnb fees on the bottom line, therefore if a guest pays £100 total but I only get £97, I have to pay the VAT on the full amount (ie £20, rather than £19.40). I then claim the VAT back on the £3. This adds to my admin workload, if not my costs, and, as you say, I think the way airbnb structure it leaves the system open to abuse - not least because they don’t provide an invoice, unlike other platforms. On the other hand, VAT is the most ridiculous, labyrinthine, unfair system of taxation in the developed world and could do with a total overhaul!
But in the U.S., when they send you what is called a 1099, it’s only the amount they physically paid out to you. It might be different in Europe.
We have the most complicated thing called Value Added Tax (VAT), which means (if you are registered) you pay 20% on the gross amount, then you can claim it back on certain other payments. In theory you are just collecting it for the government, but that only works in certain industries. It is also a massive disincentive to growth because you have to register for VAT once your income reaches around £83k per annum. Lots and lots of small businesses trade just under that threshold and will shut up shop if they get too close to it, because VAT is expensive and difficult to administer. Nuts right?
We have the same VAT structure in St Lucia (VAT only applies once you exceed a threshold). Since we are residents of the United States, we have a US business that owns the St Lucia business that owns the home in St Lucia. Our guests pay the US business, and the US business has an “operating agreement” with the St Lucia business to provide the accommodation, and we only send the amount we need to St Lucia to cover the operating costs. That amount is below the VAT limit.
So, yes, I can certainly understand small businesses staying below the threshold!
It really depends on how you operate, and what business you are in.
You can also have the VAT system work for you, especially in the hospitality industry.
I claim a lot of tax back for stuff that I use privately, not legal but a lot of people do it. Especially in hospitality there is a lot of stuff that can be used for both the guest and yourself. On top of that you have the “tax free purchases” from another EU country.
But for other industries it is a lot more difficult. For my photography business, it is hard to explain that I buy new sheets, new kitchenware’s or a new LCD tv for my business.
@Chris Oh yes, we claim as much as we can on our income tax return - and there is some flexibility there. We don’t host in our home, but we can use some of our home as office space etc. But in my experience, VAT is a whole different matter. Our main costs are finance (zero rated) and utilities (5%), and some food (zero rated) so we can’t claim much back, and we can’t add VAT onto the sale price of our units as we sell to individuals - meaning we are a net VAT payer (rather than a collector for HMG). HMRC are VERY strict, and they have changed the rules again so that all returns have to show full workings - adding more work (or cost) to small businesses. I, for one, am frightened to death about having to file my VAT returns through an accounting software package - it’s soooo out of my comfort zone!
@PitonView Me too! We, however, have had to smash through the VAT threshold to make our business work. Which it now seems to be (notwithstanding a long, bitter battle with our bank after they stitched us up - but we won 
)
St Lucia - how glorious!
But I don’t need to buy anything from the EU. By and large, we shop locally. And I’m not sure how that would help our VAT return? The VAT return form still asks you to put all EU purchases and sales on your return, so you pay and claim back the VAT on them. Right?
100% wrong
Check with an accountant Chris. Airbnb pays tax on the fees it charges and receives, hosts, who need to pay tax, pay it on what they personally charge.
I am not wrong.
If your nightly rate is 100 and your cleaning fee 10.
Then you have to put 110 in your books as income.
AirBnB has a 3% host fee, this should be put in your books as a cost.
Most hosts now put 106,7 in their books because that is what AirBnB pays out. And that is wrong.
Especially when a host needs to collect VAT, this will result in lower income and tax avoidance, which AirBnB is facilitating.
The same goes for the co-host payment, the construction used by AirBnB was helping host keeping income out of the books and facilitating tax avoidance.
This is true. But why is it true? Because the EU favours those that have lobbying power in place.
I guess this simply shows that Brian&friends in SF failed to get (and pay for) a few lobbyists in Brussels, so far.
If it is true, why are they hammering down on companies like Microsoft, Google, Apple, Facebook, Starbucks, and now AirBnB?
Yes, there is a huge lobbying power from the large businesses, but consumer protection is still more importance than the lobbies.
