France could make Airbnb tell tax man about hosts’ earnings

The French government is mulling over a new report that lists 19 propositions to make the shared economy in France less “lawless” and to ensure the tax man is getting what he is owed.

France could make Airbnb tell tax man about hosts' earnings
Photo: AFP

Pascal Terrasse, the Socialist MP tasked by the French PM with coming up with a report on how France could better regulate the sharing economy, called on company bosses to “take on their responsibilities”.

In a statement that may have the bosses of Airbnb and BlaBlaCar sweating, as well as their users, Terrasse said the sharing economy “is not a lawless zone” and proposed to “ensure the contribution of these platforms” to state coffers.

In the standout proposition Terrasse recommends companies like Airbnb – which counts France as its second biggest market – should be forced to pass on information to the French tax man to let him know exactly how much people are making each year by renting out their apartments on the home-sharing site.

The move is to prevent people from making money through companies like Airbnb and Drivy, which is the equivalent for cars, and not declaring it.

He believes a limit of between €2,000 and €3,000 a year should be imposed, above which people should pay taxes on what they have earned.

The MP also wants a distinction made between earnings and shared costs – which is effectively the premise for how the ride-sharing company BlaBlaCar functions.

The report comes at a time when France is struggling to adapt to the so-called “uberization” of the economy, with traditional taxi drivers protesting against the rise of Uber and the hotel industry claiming home-sharing site Airbnb is killing them off.

But Terrasse struck a positive note and warned that the terms “the sharing economy” and “uberization” should not be banded together.

Terrasse said the sharing economy “is a credible alternative to a model of consumption that is running out of steam.”

But it’s not just the big companies like Airbnb and BlaBlaCar that the report is aimed at, with France counting some 15,000 businesses among the shared economy sector, which is worth around €2.5 billion.

The MP urged the government to act to make sure internet giants like Google and Apple were not able to avoid taxes in France.

His proposals could very well be included in a raft of employment reforms set to be drawn up by labour minister Myriam El Khomri. 

Thanks to the success of companies like BlaBlaCar and Drivy and the huge popularity of Airbnb, France is considered to be at the forefront of the burgeoning shared economy.

“France is the market where Sharing Economy companies are made or broken,” wrote Liam Boogar on Rude Baguette, the specialist blog for French start-ups.

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Local authorities in France get power to crack down on Airbnb rentals

Authorities in Paris and other French towns will be able to regulate local businesses who wish to rent property on Airbnb, according to a decree published by the French government. 

Local authorities in France get power to crack down on Airbnb rentals
This illustration picture taken on July 24, 2019 in Paris shows the logo of the US online booking homes application Airbnb on the screen of a tablet. (Photo by Martin BUREAU / AFP)

The news was welcomed by authorities in Paris, who have long battled to keep a check on Airbnb and its impact on the rental market. 

On Sunday, the French government published a decree that allows the City of Paris to subject the renting of local businesses to prior authorisation. 

This decree applies to all types of offices, stores or medical offices who may be turned in holiday rentals. 

It aims to allow towns to limit the growth of rentals on Airbnb, “protect the urban environment and preserve the balance between employment, housing, businesses and services on their territory,” says the decree. 

The news was welcomed by authorities in Paris, which has been witnessing “the multiplication of ground floor business premises being transformed into holiday rentals,” said deputy mayor Ian Brossat, who is in charge of housing, in a press release

This decree which comes into effect on July 1st, “will prevent local businesses from being turned into holiday rentals,” Brossat added on Twitter.

The conditions businesses will have to meet in order to get an authorisation still have to be defined said Brossat, according to Le Figaro. But Paris aims to draft these regulations and get them voted by the end of 2021, so they can come into force at the beginning of 2022. 

Other towns allowed to apply the decree are those who have put into effect “the procedure of a registration number for furnished holiday apartments, owners and, subject to contractual stipulations, tenants of local businesses who wish to rent them as furnished holiday apartments.” 

In recent years, Paris city authorities have made tax registration obligatory for apartment owners and have restricted those renting out their primary residence to a maximum of 120 days a year.

Now if owners want to rent a furnished property for less than a year to holidaymakers, they must apply to local authorities for permission to change the registered use of the space.

They are then required to buy a commercial property of an equivalent or bigger size and convert it into housing as compensation. 

Until then, these onerous and time-consuming tasks did not apply to local businesses who only had to fill out a declaration.  

In February, France’s highest court, the Court of Cassation, ruled that regulations introduced to counter the effects of Airbnb and other short-term rental sites on the local property market were “proportionate” and in line with European law.