Reduce your VAT / GST Fees - Platforms charge incorrectly & change rates without notice

Regulations/Tax Issues
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Do you ever check the RATE you are charged for VAT / GST by the platforms?
I did and was very surprised. I travel a lot, and also have listings in five continents.

Airbnb
When I was running my account as an INDIVIDUAL, I was charged GST and VAT. The rate and ‘country of residence’ varied randomly between Australia, Sweden, UK and USA. My bills were 0%, 10%, 20%, 25%, and sporadically changed. Airbnb advised they ‘detect’ your country of residence using many signals. You can’t set it. They don’t tell you when it has changed. You can only check your VAT invoices to see the country and the rate they charged. Further, in some cases they charged the country as Australia, and the rate as 10% but the BILL was $0, where other times the rate is n/a. Weird.

Note Airbnb help does say VAT may NOT be charged to hosts in some cases (without clarity on exactly where/how), or to some guests - if they book as business travel with their own VAT.

When I changed my account to a UK company run account, and uploaded my VAT number, Airbnb ceased charging me VAT or GST entirely. There is not even a bill to review. There is nothing. Just a 15% Host fee and no + VAT or PDF bill. So that is good, as I am no longer paying the fee. I THINK because I have foreign properties and the account and myself are not IN the country of these, so the ‘service’ is not taxable. I was not expecting this outcome, but it’s a significant saving of several thousand dollars a year in tax I no longer pay for using their booking service.

BookingCom
They STILL charge GST on my Australian bookings, and VAT on my EU or UK bookings. So odd that they charge tax when Airbnb does NOT charge tax to my company. They also charge a ‘City tax’ of 2.50 per guest per night and 10% VAT for my Austrian property, where Airbnb does NOT charge either of these fees. Weird.

Q1. Was anyone aware they can completely avoid VAT / GST tax in some cases, as Airbnb even list on their help site?

Q2. Anyone know why Airbnb and Booking.Com + VRBO seem to handle tax so differently?

Q3. I have had two guests recently ask ME for invoices. Seems hosts SHOULD provide invoices if requested, not the platform. But the question is - how much do I charge on the invoice for tax? Booking.com says 10% VAT is ‘included’, and the mysterious City tax - is VAT applied here as well? I don’t remit tax, so I don’t think I can claim tax on any invoice, else I am billing for tax that isn’t being paid to any government. This sounds very wrong.

I could not find any help in the forum on how to issue a guest invoice, but it’s the TAX aspect of such invoices that seem very unclear.

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BookingCOM Payment details:

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VAT, GST, IVA, (various names for goods and services tax in different countries), occupancy tax, etc, are charged to the guest, not the host. As a host, you are not paying those taxes, the guest is.

Depending on the arrangement Airbnb has with tax depts in various locations, they may release some of those taxes the guest paid to the host to submit to the tax dept. themselves. For instance, where I live, in Mexico, Airbnb withholds half the VAT to submit to the tax dept. and releases half to the host to submit. My accountant can then subtract any VAT tax on invoices I have for expenses, from the VAT Airbnb released to me, and I pay the difference.

And if a guest wants an invoice, since they pay Airbnb, not the host, it is not the host who is responsible for providing an invoice.

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Regards guest invoices - Seems Hosts are required to independently issue invoices on request, not the platform - at least for BookingCom. For example see here:

Airbnb is a bit more helpful, as they do supply invoices to guests - but these make it clear they are an intermediatory payment processor, so they are still not actually providing you a host invoice - they are providing evidence that you are released from a payment obligation. Very confusing though.

The invoice says: Airbnb Payments is a limited payment collection agent of your Host. It means that upon your payment of the Total Price to Airbnb Payments, your payment obligation to your Host is satisfied

Regards the VAT / GST, the invoices I posted above are for me as a Host, so I have paid these, not the guest. My guests do not pay any tax as I use the Airbnb ‘Simplified pricing’ model, which I think is becoming more common - and is mandated in some regions. So my service fee is 15% plus VAT, though the VAT isn’t charged to me if I have supplied a valid VAT ID which I have some time ago. I also noted that when I was regarded as resident in USA as an individual (due to VAT ID error on Airbnb’s side - their system said my ID was invalid when it wasn’t), then no tax was charged to me as a host for some reservations. A bit confusing to say the least.

Airbnb help: Locating your VAT invoice - Airbnb Help Center

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You say you pay all the service fees and VAT because you use simplified pricing, but I would assume you charge enough per night to cover that. Which means that while technically you end up paying all service fees and VAT, the guest is actually paying it, just like when hosts don’t use simplified pricing.

As far as what you copied above from Airbnb, as far as I read that, it just means whatever the guest was charged when they booked, that is their total payment- the host can’t charge them more. Doesn’t have anything to do with invoicing.

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Airbnb is assisted by Ernst&Young in my area for taxation purposes, as can I’ve seen. Booking Com, Expedia, Vrbo and others are using different other counselors and here is the reason for their different approach :blush: They are periodically pressed by regional authorities to comply to various rules, and they are mimiquing to comply, in order of coming requests from the authorities (who are sometimes the consequence of political winds). Indeed, all the taxes are at the end paid by the guests, but the duties, property taxes, terms of payment for the owners are heavily different depending on the form of organisation they use to be registered for taxation in the countries they operate (authorized physical persona, micro entity, small company, medium company, etc…) Even the VAT rate and collection terms differs for these. For instance in my country who is about to reach the bottom of public finances they want to raise to the sky the property tax for the owners who rent. They prepare to increase VAT from 5 to 19…The owners who are having houses in different countries/continents are having good reasons to try to understand taxes and optimize their organisation in a way who allows their survival.

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Q1. Yes, I’m aware…. I run a very small company that is not yet registered for VAT, as this is optional in my country for businesses with turnover below a certain limit. Given the extensive paperwork involved in VAT registration, combined with my company’s small scale and income, I estimated that the potential savings in VAT wouldn’t cover the costs of bureaucracy and the extra time spent on tax accounting. The paperwork here can be really time-consuming and stressful! :wink:

Q2. These companies are based in various countries. Some have even been required by local authorities to establish tax points in different regions or have split operations across countries to optimize costs and taxes. It’s essential to check their VAT code and its prefix on their invoices carefully, as they may be part of the same large company group but operate under different VAT codes. I’ve noticed this with Booking dot com, Microsoft, and other major companies.

Q3. If you operate as a VAT-registered business, you must issue invoices and declare them to tax authorities. The specific process varies depending on the country where your business is registered. As I understand, the general rule is that the VAT rate must follow the tax laws of the country where the income was generated. For example, if you own a house in Romania and rent it out, you’d generally need to be registered there, be accredited by the local Ministry of Tourism, and issue invoices with a 5% VAT rate and any applicable local tax for individual guests. If your guests are business travelers who provide a VAT number, however, the tax situation can get more complicated, depending on their VAT location.

So, @Chris_Cooper, if I understand correctly, you manage your rental business worldwide as a UK-based and VAT-registered business? In which country is the house located where your guests requested an invoice? Your question is fascinating to me, as accounting and tax were my first professional love! You can easily find an invoice template online, but the decision about what to include on it should be based on international tax laws, given the different locations of your properties. I’d definitely recommend consulting an international tax advisor! :blush:
If your next travel plan cross Bucharest anytime I would happily host you for a couple of days just for the pleasure of having a business/language/taxation exchange brainstorming :blush:

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The guest booked from Germany, the property is in Austria, I am currently in the USA, and my Company (owner or legal entity of the Airbnb account) is in the UK.

So it’s very international I guess, and quite unclear how tax works, as where is the ‘service’ provided? As an online platform, it can’t be Austria surely, as neither of the three entities involved are located there when the booking was made. VAT isn’t on the accommodation provided, but the booking service. So was the booking facilitated in USA (where I was at the time), or UK (Where my company is based), or Germany (where he was located)

I asked for tax help here, as I used to live in Australia and manage one Airbnb there still.
https://community.ato.gov.au/s/question/a0JRF000002MCvp2AG/p00336723

I also asked for ‘complex’ tax advice there as well. It’s so very confusing to know how VAT/GST works with such international online booking platforms - mainly classifying WHICH jurisdiction should the tax apply - The country of the guest, host, property or account owner?!

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Surely? Incorrect. VAT tax is applied and paid according to the country in which the listing is. It has nothing to do with where the online platform is located or your country of residence.

My listing is in Mexico, therefore the Mexican VAT of 16% is applied. The occupancy taxes are also paid to Mexico. I have to be registered with the Mexican tax department.

While I am a Canadian citizen, no VAT is applied there.

Income tax on my rental is also paid in Mexico, as well as Canada. But because Mexico and Canada has a tax treaty which prevents double taxation, the income tax I pay in Mexico is deducted from any tax I would owe in Canada.

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I’m not sure about that. Certainly in Australia there is no tax required for short term stays, but tax is paid on online booking fees themselves (not the stay fee). But years ago when I uploaded my UK VAT number to Airbnb, they stopped charging me VAT. There was some glitch where their system regarded my VAT number as invalid and they began to charge me VAT again - but after I uploaded my same VAT number, they are again not charging me VAT as you can see from the screenshot above. Notice the one where the host fee is 15% and not 15% + VAT? In these cases and currently, there are simply no VAT invoices issued by Airbnb. There is no tax that they are charging me for the use of the online platform.

I don’t own the Austrian property, and am not sure the tax requirements of short term stays directly, so I can’t see that I would be liable for any VAT as I simply have no direct connection to the country at all. But I imagine IF VAT is required to be paid in the country of a listing, then the platform should be charging it.

It’s nice that it seems I am not being charged, but also I can’t see how it could be chargeable. If I arrange something outside Austria, with a customer outside Austria, on a platform outside Austria, for a property I don’t own - how could Austria say I was liable for VAT on the booking service?

It seems that VAT on a booking service could only be charged to the platform (which it isn’t, or certainly isn’t passing on to me since I uploaded my VAT number to them), or to the property owner. But to the agent arranging a booking, who has no direct legal connection to Austria? Seems this can’t have any Austrian VAT liability.

As for your Mexico listing - Can I ask

Q1. Does Airbnb issue you with VAT invoices? If so - note that I am not issued these, but I was before.

Q2. Is your Airbnb account owned by you as an individual, or as an entity that has a valid VAT ID uploaded to Airbnb? If an individual, they DO charge you VAT, and it’s based on the country of residence. If it’s a company with a valid VAT ID, then they DO NOT charge VAT, albeit this is relative to the country your company is registered. It’s not entirely clear, but certainly if UK they do not charge VAT.

And another curio - For a short time Airbnb was billing me as a person, not my company, and when in USA, there was also no VAT charged, but I believe this is also related to which state in USA you are in, as State taxes change.

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To answer your questions, Airbnb does not issue me invoices. For Mexico, there is a third party processor that issues the invoices, called Facturify, that I had to set up an account with (that was done through Airbnb). They email me an invoice every month showing the total earnings and the taxes that have been taken out. My accountant then uses that to file my monthly declarations to the Mexican tax department. (Tax declarations are filed monthly in Mexico, with VAT and occupancy taxes paid monthly)

I am an individual- my listing is in the house where I live. There is no such thing here as a VAT ID. I just have a Mexican tax number, just as you have a Social Security number in the US, that is all that is needed.

I don’t understand what you mean about not owning the Austrian property. You mean you are managing it for the owner and the listing is on your account as the primary host? You pay the owner a share of the net profits?

I have no idea why you have sometimes been charged VAT and sometimes not, but VAT is definitely charged according to the country where the listing is- it has nothing to do with where your guest is from, where you are from, where the online platform is based, whether you own the property, or anything else. And you do have a connection to Austria- you have a listing there that you are making money on. When you do business in a country, you pay taxes to that country.

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Interesting, but also adds more questions for me. I don’t understand why Airbnb was issuing me VAT invoices for years, but doesn’t for you?

As far as I believe. I can’t pay VAT without being charged a VAT invoice surely? To pay VAT I want to claim back the VAT, so want to specify the VAT number of the billing party. But if we are not issued a VAT bill at all by anyone, not even a third party - which ID number would I use to claim my VAT back?

As I see it - unless I am issued a VAT invoice, I can’t pay VAT on it. For example, I would not even know the amount to pay, especially as Airbnb has been previously changing the VAT rate wildly for me, as you can see - with four different rates that I have discovered so far, and could even be five. They don’t tell you when the VAT rate changes. So now they do not issue me a VAT invoice at all… which rate would I pay?

And when I lived in Sweden, Airbnb charged me 25% VAT on my Australian property bookings (of the platform fee), when the GST rate in Australia is 10%. It’s quite disconnected from the country where the property is.

Well, I have done my best to discover what VAT I am liable for, by asking a Tax authority, but unless I am issued a VAT invoice, with a VAT ID I can use, and told what amount it is - I can’t see it as something I can even do.

I certainly pay tax on my earnings. This is different. But VAT on the ‘Platform service fee’ can only be by the platform issuing me their VAT invoice - and BookingCom DOES, but Airbnb does NOT. I can’t figure it, so am close to giving up trying :slight_smile:

Re other properties, I help out some friends on their listings really, so it’s mainly Australian property that I earn most on, but I help several others on their listings as a co host, but don’t own, or lease these properties.

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When you say you help out some friends on their listings as a co-host, are those listings under your Airbnb account? The listings should be under the homeowners account, and they should get the payouts and then pay you for managing- then you wouldn’t have all this confusion about VAT taxes- they would be responsible for paying that.

Of course you would still need to report your management earnings to the country or countries you pay income tax in, but that would have nothing to do with Airbnb- you would get an invoice from the property owner for your management fees.

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Some are under my account, but payments can go direct to them via Airbnb.

Either VAT is taken out by Airbnb immediately (it was like this)
OR
VAT is not taken out by Airbnb (It is like this for a USA resident in PA, OR for a UK company where you have provided your VAT ID)

Says: In certain countries, you MAY NOT BE CHARGED VAT on Airbnb service fees if you are registered for VAT.

Either of these two options appears to be fine. My income is anything I receive, their income is anything they receive (direct from Airbnb), and VAT seems to be either paid already by Airbnb, or not applicable in locations where it doesn’t apply, or where a VAT ID has been provided and then only in some countries.

There is also no VAT/GST applicable in Australia for short term stays (Accommodation none, but platform fees yes - for ‘most but not all users’), so my main listing doesn’t have any tax obligations other than income tax.

Very complicated. So it’s good to get your views or others.

To recap, Airbnb has invoiced me as an individual, but also sometimes as a ‘company’, with rates of 0%, 10%, 20% and even 25% - but also sometimes NO tax invoice at all for me as an individual (when in some USA areas) or NO tax where my UK company VAT ID is accepted.
Plus also - a few confusing cases where the VAT invoice is shown 10% but the total VAT is billed as $0.

In all there are more than half a dozen variants of VAT tax I’ve paid over the years as per my screenshots, and I was never aware of these constant changes to the VAT bills till I began digging into this area. Meanwhile in Austria, BookingCom charges me 10% VAT for bookings there, when the Austrian rate is actually 20%, and Airbnb charges 0%.

Am I the only one going nuts trying to understand VAT bills across countries and platforms? It all makes absolutely NO sense to me!!!

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Just for some idea of scale. I began reporting VAT issues in August.
The latest email thread begins 19th Sept.
Amusingly they worried I had disclosed my VAT number - it’s very public in the register. I explained it was certainly not private information lol… but anyway…

Maybe I’ve opened a can of worms here? Or maybe they just hope I stop asking complicated questions. It should not be so hard to establish the proper tax liability for using an online booking platform, but both Airbnb and BC seem to be charging quite incorrectly as I see it… though what would I know… I’m just a host and not a tax expert… but… sigh.

(And this doesn’t even cover the confusion of BC saying it’s very much a Host responsibility to issue invoices to guests, including ‘their’ tax paid - when we didn’t pay this tax ourselves. Do we use the BC VAT ID for the tax component on ‘our’ guest invoices? - while Airbnb says they issue invoices to guests, not hosts… like what?)

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@Chris_Cooper I think I can see the root reason of your dilemma… I can confirm for you what already @muddy said, the VAT is a tax who is charged at the place where the service is consumed, so in the country where the property is located, for the hosting service. Each country is having different rules and quotes regarding VAT, sometimes a country is having many quotes for different commercial transactions, depending on which commercial sector that country wants to encourage. These quotes in the same country can be changed periodically, as in my country happens due to the winds of change, political reasons, etc. At the same time, the VAT can vary according to the type of service is offered, for instance, inside of my country the hosts who are VAT payers are kept to charge VAT differently for hosting (5%), cleaning services(16%), meals offered(9%)… The services that can be seen as management, consultancy or electronic services might be considered differently in terms of the “place of service is consumed on” , so the VAT rule of the entity who offerd them might be considered instead. But everything is written down in the local, updated legislation of the country the property is located in, intersected with global rules and the many international one-to-one agreements for avoiding double taxation.

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And about the Airbnb worries regarding you declaring your VAT code, I can confirm that indeed, this platform is giving more love to the individuals than the companies on their platform, because their business was started on working with them, they are mainly trained to work with individuals and their feelings, it’s more simple and cheaper to deal with “all the same” entities … They like the kind people who take the loose on themselves and don’t have the power of fighting with them on court… And the platform is full of bugs and errors, promoting illegal content sometimes… Yes, they like the dust of the ground, the vague adresses for properties, they even promote houses at twenty km from a city (and in another country) like being IN city. What to say more… It’s all about money…

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So if I do not provide the hosting service, I should not be liable for VAT on the hosting service? I think my query is on the VAT of the PLATFORM fee, not the HOSTING fee.

I don’t think the platform fee VAT should be tied to the country of the listing, and this makes sense as when I was living in Sweden, Airbnb changed my platform VAT fee to be Sweden rate of 25%, even though my property stayed in Australia lol. It seems Airbnb charges the platform fee VAT to the country where the host is resident, OR the country the legal entity is resident (for a company) - and if that company has a VAT ID, then the platform VAT seems not to be charged.

I totally agree there is VAT obligations on the hosting service though - albeit in Australia this is zero. GST is charged on the PLATFORM fee though, but ONLY if the host is resident in Australia.

But you are correct to highlight that VAT on the hosting service IS tied to the immovable property. Just that the platform fee for booking is a service, and the tax for this should be paid in the country where ‘this’ service is delivered - and this isn’t always the same country as the one where the hosting service is delivered.

But my several queries are still unclear…

  1. Why does Airbnb charge no VAT to me for the platform fee anymore, for any property in Australia or Austria or UK?
  2. Why does BookingCom charge VAT in Austria but not Airbnb?
  3. Why does BookingCom charge 10% VAT in Austria and not 20% Austrian rate?
  4. Airbnb charges VAT on the platform fee based on where the account owner resides (person living, or company resident) unlike BC, but then changes this secretly - and never advises that the ‘deemed’ Country of residence and thus VAT fee applicable has changed. Mine changed so many times, and I wasn’t aware! Why don’t they alert you that your rate has changed, or your VAT ID is mysteriously not valid anymore (when it was before!)
  5. Why can Airbnb change the entity billed, and bill VAT on the platform fee to the user as an individual, or the company - without warning of such changes.

I don’t hold my breath on these answers… it seems just too complex a topic, and there are more questions still… but here are five ones that I would think should be made clear by the platforms, or by the relevant tax authorities.

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You still seem to be insistent that some of the VAT is charged based on the host’s country of residence. You have been informed here that it is not- all the VAT, whether on the platform service fees or the nightly fees, that are charged on a rental are linked to the country where the rental is.

Don’t know how many times this can be said before you will believe it. It isn’t a matter of how you think it should be charged- it is how it is.

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The screenshot shows I was charged Swedish 25% VAT for bookings on my Australian property, and Airbnb support told me that this was because their system ‘detected’ I had been in Sweden for a year now.

Are you saying that Airbnb is wrong to charge VAT based on the hosts country of residence? Or do you think it might be a ‘mistake’ in their system to charge the wrong VAT perhaps?

Airbnb used to charge me 10% when I was in Australia. After living a year in the UK my Airbnb VAT changed to 20%, then I moved to Sweden, and a year in Sweden Airbnb began charging 25%, then USA it stopped charging me VAT.

Given it’s always been the same property, which hasn’t changed country - I guess the question is why do VAT bills issued by Airbnb change depending on where you live. Airbnb Support even told me it does, and that the Country of Residence is an internal location that you can’t change, as it’s deemed by their systems. They told me it’s based on various factors like the country your phone number is based that gets SMS codes, and the location of your App use is in, and the country of your ID and several other factors. They bill you VAT based on your country, and they detect your country, you can’t change it yourself it seems.

I believe this is not how you think it should be, but the screenshot above shows several different VAT rates charged based on where I was living at the time. So I guess it could be that Airbnb are wrong if you are sure this is not how it is supposed to be. But it is how it actually is - and this is what sparked my query on how VAT works, as it’s confusing for sure!

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Airbnb support reps give out incorrrect information all the time. Talk to 10 different reps and you’ll get 10 different answers.

You absolutely can change your country of residence on your account. I just did it recently- you just go into your account, click on Personal Info, and change it.

If you really want answers to all this VAT confusion you are experiencing, you need to consult an accoutant who is well versed in international tax law. Most hosts here do not manage listings in multiple countries, nor change our country of residence as often as you seem to, so no one here can really answer all your questions, although @Ola seems to be the most informed.

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