Airbnb paid French tax man just ‘€70,000’

Airbnb, the online house rental giant might be worth €27 billion but the company only paid €70,000 in tax in France last year, according to reports in the French press.

Airbnb paid French tax man just '€70,000'
Photo: AFP

The house-sharing site, which has taken France storm, paid €69,168 in corporation tax last year according to Le Parisian newspaper which has studied the files and crunched the numbers.

Even more surprising than the apparently measly sum is that the tax paid was actually a drop of 18 percent on the amount the company paid in 2014.

France is Airbnb’s second biggest market after the United States and its popularity has ballooned in recent months, which makes the amount of tax it reportedly pays even more surprising.

Earlier this month the site announced that it had passed the 10 million mark for the number of guests lodged in France since it was launched in the country back in 2008. And in the month of July 2015 French hosts welcomed twice the amount of guests as they did in the same month in 2014.

It must be stressed at this point that the company is not doing anything illegal by seemingly paying so little taxes.

Airbnb is simply taking advantage of tax optimisation techniques, long enjoyed by other multi-national companies.

When clients pay for Airbnb services in France they hand their money over to two businesses based abroad – one in the UK and one in Ireland.

The French subsidiary of Airbnb, which is called SARL Airbnb France is only concerned with marketing and the promotion of the brand in France, which generated a turnover of €4.9 million and a profit of €166.673.

The company defended its actions.

“Airbnb complies with all the tax laws of the countries where we operate,” read a statement to Le Parisien.

“Our offices in provides marketing services and pays all the applicable taxes.”

While the company may be acting within the law some French politicians are furious.

Yann Galut, a socialist MP who specialises in fighting against tax fraud slammed the figure as “completely staggering”.

“It’s utter nonsense,” Galut said. “It’s urgent that the finance ministry and we lawmakers give tax authorities the legal tools that will force Airbnb to pay a fair amount of tax in France.”

And Philippe Martinez, the firebrand head of the leftist CGT trade union said: “We need real tax reform in this country. We need the government to impose strict and firm sanctions.”

The news of how much tax Airbnb pay in France will the heads of France’s traditional hotel industry unable to sleep at night.

The industry has long fought against what is sees as unfair competition from Airbnb and at one point threatened all-out war against the rental site.

As a result of the pressure Airbnb agreed to charge visitors the traditional “tourist tax”, that must be paid by law in France.

In February this year the company announced it had handed over €1.2 million euros worth of taxe de sejour to authorities in Paris.  However that maw money recouped from users.  

Airbnb does however argue that it contributes far more to the French economy than just the tax it pays.

In fact in November last year company said it contributed €2.4 billion to the French economy – a figure calculated by combining revenue earned by Airbnb hosts with 'indirect' contributions to the economy, including holiday spending on meals and sightseeing by those using the home-sharing site.

“When you consider that 83 million people visited France this year, and that 100 million are expected annually by 2010, Airbnb is contributing to the growth of this figure,” said Nicolas Ferrary, Director of Airbnb France, who also claims that Airbnb supports 13,300 jobs in France. 


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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.