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I am finally done with Airbnb. After 2 years of working with them and being a superhost, I have decided (after due advice from my accountant) to take off all my listings from Airbnb by the end of this month. I work with other booking sites like Booking.com and TripAdvisor, and Airbnb has become a nightmare because of its lack of transparency on issues concerning commission and tax.
COMMISSION: Unlike many other booking sites with fixed commission rate, Airbnb states on its website that its commission varies between 0-20%. Last Easter, I had a shocking review from a guest who said he paid 3500 for a room for which I had set a base price of 1800. He was absolutely right in complaining in his review that the room was overpriced. I set a base price of 1800 so that after the inclusion of even a 20% commission plus tax, the final price would be in the range of 2500, which I consider the right price for that room. Till date I have not been able to figure out how Airbnb marked up the price to 3500 (almost double of the base price). When I asked Airbnb if the guest’s claim that they paid 3500 for this room was correct, they refused to confirm this, but instead offered to remove that guest’s review without any questions asked. Seeing just how quick they were to remove a review when asked about their commission was disturbing on many levels: Isn’t their review system just an eyewash? Are they lying on their website about their commission rates? How can I, as a host, expect good reviews if I cannot control or even estimate the final price charged to guests?
TAX: As per Airbnb’s tax information for my jurisdiction, it is stated on their website that tax will collected by Airbnb from guests and remitted to the host’s account once a month. While Airbnb was remitting taxes on time earlier, they did not remit tax on 4 bookings in April. And then for May, they have not remitted tax on ANY booking. I raised a complaint about the non-remitance of tax on April’s bookings. Apart from sending me an e-mail recording my issue, there has been no further response from Airbnb for 20 days. Today, I called customer care to complain about non-remittance of tax for May’s bookings, but I have no faith that their customer care will offer any resolution. The representative I spoke to yesterday said he would call back and did not. The rep I spoke to today was eager to hang up when I badgered him about three pending tax issues. It also does not help that they do not have a local office in my country.
TAX BENEFITS: There is a tax benefit called “input tax credit” that is available in my jurisdiction. This means that I am entitled to claim a refund of tax on Airbnb’s commission on my bookings. However, because Airbnb refuses to disclose the commission amount collected from guests, I cannot avail this benefit. Airbnb has not replied to my request in this regard for nearly 3 months. When I sent two follow-up e-mails, their standard response was: “we are waiting to hear back from the tax team”.
I cannot AFFORD to take bookings from Airbnb any longer. While Airbnb simply pretends to address these issues, I am forced to pay these taxes out of my own pocket before statutory deadlines and my net loss on Airbnb bookings because of this is as high as 36%. I am in the process of tying up with other booking channels and will say goodbye to Airbnb in a few days. And then I need to sit with my accountant and lawyer to send them a notice to claim the due amounts back.
It is not really all that helpful to post a very long rant about tax issues, and deliberately omit the country you are talking about. How is anyone going to be able to comment?
In my country, Germany, there are many taxes applicable to Airbnb, and I am still struggling with compliance, even after having been a host for more than five years.
Personal income tax. Now this is probably the easiest kind of tax. Airbnb income counts as personal income, and will simply be added up with all the other income I received, and taxed at a personal rate, at the end of the year. Perhaps after substracting expenses like new mattresses etc which I bought.
Local tourist tax. This is charged by our city at a rate of 5% of net booking value and calculating, collecting and submitting it can sometimes be a nightmare.
Value added tax (VAT). This is another nightmare in Germany. At present, I don’t charge it, neither do I think I should, but I might be in violation of local tax laws here. For guests travelling on business, I sometimes do put it on the invoice, and simply pay it out of my own pocket. I am not even sure if 19% (the standard VAT rate) or 7% (the reduced VAT rate) is applicable on Airbnb rentals.
Business tax (Gewerbesteuer) is another tax which may, or may not, be applicable to Airbnb rentals in my country.
I am currently do my tax return in Australia as our tax year ends in June. To see the fees if you go to Progress>Earnings>TransactionHistory>download csv file you can open the csv file in Excel and it will tell you the date, booking reference link, #nights, gross host amount, fee amount and net host payment after fees.
This is exactly how it used to be till March. I used to download the CSV file and the amounts mentioned as occupancy tax for each booking in the file would match perfectly with inward remittances in my bank statement. Then suddenly Airbnb stopped remitting occupancy tax.
Your post sounds like Airbnb is doing something illegal here with avoiding paying tax, Tec. I am not sure why they don’t explain to you what is happening there but I just doubt that Air will do.something as illegal as to mess up with taxes issues. They had enough trouble with it in a beginning in such extent that they started collecting occupAtional tax themselves as majority of hosts never paid anything.
I am in US ,and here it’s pretty simple: I do my personal tax return and indicate only amount I get from rentals. There is a record of it on earnings part of your account. I don’t indicate the total amount guest paid. Actually I am not sure why you need to know the total amount guest paid.
It’s also hard for me to believe that your guest paid so much commission and taxes. I think.Your guest is lying.
This is what Airbnb says about taxes for my jurisdiction on its website:
“For any host that has provided Airbnb with their GST registration number, Airbnb will collect the GST from the guest at the time of booking and will payout hosts the taxes once per month such that hosts may complete their monthly compliance timely.”
It is this once-a-month remittance of tax that I am talking about. And since it is my responsibility to complete my monthly returns before the due date to avoid penalties, I have had to pay tax for 2 months out of my own pocket since Airbnb did not remit those amounts collected from guests to my account.
Two issues here. One is Airbnb’s lack of transparency on booking fees. I wholeheartedly agree. It’s not equitable nor a great business practice.
The second is a guest who complains after the stay is complete that he paid too much. And it doesn’t matter what you set as a “base price.” What is your top price? If you are using dynamic pricing like price tips/smart pricing the price goes up and down within your range. What was the price shown when he inquired or booked. The price including taxes and fees is shown to the guest before they complete the transaction. So if he paid too much he has only himself to blame. The only way he could be blameless would be if he has a confirmation that says he will be charged xxx and then his credit card was charged a different amount. In that case he should be calling his credit card company and Airbnb, not blaming you in the review.
Sorry about the tax situation in India. It does sound dreadful.
I dont use Airbnb’s Smart Pricing feature. I have always set fixed rates ( i.e. no floor and ceiling price as is the case in Smart Pricing). For that particular day, I had keyed in a price of 1800. By “base price”, I was referring to the fixed rate over and above which Airbnb adds its service fee and taxes.
I have read this page so many times I could perhaps recite it while I sleep. Indian tax law, as far as Airbnb transactions are concerned, is fairly simple. It is Airbnb that is not doing its part to comply with Indian tax laws.
This probably differs from country to country. In fact, in Germany, Air just introduced this feature. Since a few months back, I suddenly get to see not just what I will receive, but what the guest paid, too.
If you have to pay German VAT then you are having a good income.
You have to pay VAT, if your revenue is over €17.500.
If you do not pay VAT, it is illegal to put it on the invoice! Also, if the booking goes trough AirBnB you should not write an invoice for your guest, they should get the invoice from AirBnB.
Yes, but you may opt for VAT payment even if your revenue is less than that. This means that VAT paid on mattresses etc will be deductible.
True. I didn’t think of that. Thanks for reminding me!
That’s true. But Airbnb is NOT a hotel, for tax purposes, and Wimdu charge 19% for their services, not 7%. So I am really not sure which rate to use, if at all.
Indian tax law, as far as Airbnb transactions are concerned, is fairly simple. It is Airbnb that is not doing its part to comply with Indian tax laws.
