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Paying taxes to the origin country but managing the listing in another country

Just need some advice because someone could have faced the same situation. I am the resident of the country A but I manage the listing in the country B (where I currently live) for the customer from the country C. Recently I noticed that Airbnb started to accrue VAT at a rate of the country A (my origin country) to my host commission. I asked them about the reason for doing that and they replied that as soon as resident of country A and their records support that fact they have to accrue that tax. That sounds very weird for me due to following related questions 1) Does that mean that at some point that all my purchases when I am abroad have to be subject to my resident country VAT? 2) I spend more than 185 days abroad and already lost my tax residence status in my passport country (therefore I am not required by law to do any tax reporting or pay any taxes to my origin country. Looks like Airbnb just do not want to consider such small deviations from the general policy and they simply told me that because I am the resident of country A and country A has VAT they charge it and it doesn’t matter in which country the listing is - USA, Africa, Australia, etc.

If someone was or is in the same situation please describe what can be the ways to avoid that double taxation issue. Reporting and claiming back the tax in my origin country would be a big hassle as soon as I don’t live there anymore.

You’re going to have to talk to an international tax consultant. Or perhaps stop managing properties cross international boundaries.

awesome advice. Stop making business because the booking platform is just lazy enough to consider any special tax cases. I DID talked to the tax advisor - and as soon as I am spending more than 185 days outside of the country of origin I am not considered its tax resident and do not have to pay any tax or report my revenue. This is the law. And another thing - if i am on travel to USA for example - do I need to pay VAT for each meal I buy in American supermarket or every taxi ride?? Its definately a Pandora box we open here.

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Does your business turnover currently exceed the vat threshold of country A or B, if not I can’t see what the problem is as you can’t reclaim it anyway.

If your assertion is that Air is violating the law per your counsel from your attorney, take them to arbitration. That is your remedy.

Excuse me if my explanation is a bit confusing.

Airbnb recently announced that it starts to collect VAT on its services to guests and hosts from certain countries - like UAE, Russia, Belarus, Albania and some others. That is in line with the countries’ tax codes - if u do business in the country, you have to pay all related taxes. As individuals are not entities so they pay that VAT as a part of their payments to Airbnb. And they can’t deduct that VAT because they are not companies which allowed to do that in certain cases. That makes sense if u and your guest are from “VAT” country. But that situation puts you in a quite unfavourable situation if u start hosting in a different country and/or receive guests from VAT country. Because in case 1 you have to pay more taxes than other hosts (but actually you don’t have to do that as soon as under double tax avoidance agreements between countries if u spend more than certain time outside your origin country u are free from any tax responsibilities) and in case 2 as a guest all bookings are more expensive for you compared to other providers. That doesn’t looks fair.

Now it looks like Airbnb just using some universal principle to calculate the related amount of VAT without considering any particular situations which might take place.

Maybe you should get a new Tax advisor, because your current one does not seem to have a clue on what VAT is, and how it works.

thats not feasible due to legal costs. am just thinking about changing the ownership of the account to put a local nominee as I am not happy to pay more commissions to Air compared to other hosts in the area simply because of the fact that my origin is from the “VAT” country.

@moby989 If I understand correctly, Airbnb is deducting taxes from your payouts that you don’t even owe?

I believe someone else on here had a similar situation. They were in the US, Charleston maybe? Airbnb was collecting occupancy taxes from their payouts but they also didn’t need to pay them.

The over-riding question here, is where are these taxes going? If they are being collected but not owed? Is Airbnb paying them or keeping them. Even if they do pay them, it’s likely they get sent back a refund for them if they are not owed. Though I think in many places they just pay a lump sum to the taxing authority, so the taxes are being paid but not actually accounted for. If they were paid and accounted for to a specific individual (you for example) they would likely receive a refund check from the taxing authority. If that happens, what are they doing with those taxes, if they aren’t refunding you. Ugh. It is indeed quite the situation. Sorry, I don’t have an answer for you but this does seem interesting to me because they seem to be doing it elsewhere as well and certainly seems like something that will come out eventually. Please let us know if you find out more.

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I was actually thinking the same. I am sure they do not account them individually as I didn’t provide my tax ID from my origin country to them and it simply not possible to match me with that tax ID ( I am 99% sure that Airbnb doesn’t do that). That is the reason I can’t claim that tax back because i can’t prove how much been paid on my behalf to the tax authorities in my origin country and Airbnb works as a tax agent here. Interesting question would be if I as a host do a business in a VAT country at the same time my origin country has VAT - will Airbnb accrue VAT two times on my host commission and pay that VAT to both countries budgets?

Is it not noted anywhere on your transaction summary or on the original reservation? I know that when I get a confirmed reservation, it states how much the guest was charged for local occupancy taxes.

I was doing business in my origin country before and I am sure our tax authorities will require how much Airbnb actually paid so third party statement not some kind of printout from my extranet on Airbnb. Getting that information from Airbnb (personalised) will be a dead end.

Forgive me if you have already tried this and it’s not what you need. I’m not trying to be daft. It seems like if you go to the invoice and file it with the country it was paid to but you don’t owe it, they may refund?

thanks - I know i can access these numbers but the thing is that the payment is actually done (or not done) by Airbnb so I will be required to prove that this payment was actually made and prove that amount to get a refund. I am not sure how Airbnb reports to my origin country tax office but I am certain they will require some evidence from the third party (Airbnb) they actually paid it. As soon as I guess that all the payments are done by lump sum it will be hard for them to attribute a certain portion of that payment to my identity. Tax people need to verify all the tax calculation done by Airbnb and connect my identity to my account in Airbnb. That is not what they are doing all the time - this is quite new area for them so don’t think I will get any refund in a foreseeable future. I don’t live in my origin country anymore, everything is done offline so I think efforts doesn’t worth the result.

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Are they taking VAT from your payout or are they adding VAT on top of your nightly rate and charging the guest for it?

  1. they are taking VAT (host commissionVAT rate) from my payout 2) for guests from my country of origin they charge guests for VAT (guest commissionVAT rate), for others they don’t charge any VAT (may be except for the countries where VAT exists also but I didn’t have a change to verify)

This is getting confusing, VAT and tax are not the same thing.
The guest pays VAT on the guest service fee only, according to the country they live in, nothing to do with listing location.
The host pays VAT on the host service fee according to hosts country of residence nothing to do with listing location.
Your tax ID is not required as its airbnb that’s registered to charge vat and submit it.
Airbnb Ireland VAT ID: 9827384L
Each booking has an invoice showing the vat charged on the host fee if you are able to reclaim it, you cannot reclaim any vat airbnb charged on the guest service fee.
No vat is ever charged by airbnb to the guest on your nightly rate, this is the hosts responsibility to include in the nightly rate if registered to do so.

This.
That is why I told the OP to get a different tax advisor.
Someone that can actually explain what VAT is and how it works.

VAT has nothing to do with where you live but where you consume.

And since is a digital service, you pay VAT at the location where the digital service originates.

For the EU for example AirBnB is in Ireland, and every host has to pay Irish VAT over the commission. The same goes for the guest.

OP should give a bit more detail on which country the AirBnB office is, and where she lives.

No, that is incorrect.

While the originating invoice country is the Republic of Ireland, and I can only speak for a listing in Spain, you will pay VAT at the prevailing rate in the country of your account (listing). For us, this means 21% as opposed to the Republics 23%.

I’m no international tax accountant, but I suspect this is a negotiated agreement between Airbnb and the various local tax authorities.

vat

JF

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VAT means Value added tax and this basically means that it is charged at a place where goods were sold or services rendered. The subject of taxation is from its name - the value added. In case of Airbnb it is the remuneration of the booking system for its services related to connecting the host and the guest, facilitating the payment, etc. Who finally bears the tax burden - the customer ie the host or the guest. Who physically pays the tax - Airbnb as an agent but collect its from the host or the guest via surcharge on its fees. These are the basics and theory. Let go to the practice.

Ok - u are from UK and as a host pays 20% VAT to Airbnb as a part of your host fee. That was not always the case but I guess Airbnb was pushed to accrue and pay VAT for its services at some point. Now lets consider you moved to United States which doesn’t have any VAT (only sales tax). You purchased the house, growing kids, just doing normal life. At some point you decided to rent you house via Airbnb. You pay all the taxes which applicable for the location where u are now in US but Airbnb still continues to make surcharges for your host commission (20%) because you are the holder of UK passport. WTF? They just don’t care that you moved and still thinking you are in UK. What your US business have to do with your origin country economy? Nothing! You are just double taxed.

There is a consequence of this logic - does that mean that every digital business in USA which has presence in UK have to charge you VAT for their services? Advertising in Facebook, online shopping, UBER, name a few. I understand that all this digital economy is new and still many tax related issues are not really well organised but the situation when your tax burden outside of your country is still determined by your passport color is out of my understanding.

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