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TAX

Airbnb paid French tax man just €93,000

France is Airbnb's second largest market and yet in 2016, the internet giant paid the country just €92,944 in taxes – equivalent to the amount paid by small and medium-sized enterprises (SMEs).

Airbnb paid French tax man just €93,000
Photo: AFP
Second only to the US as Airbnb's biggest market and with Paris its top city for listings, during 2016 France received a meagre €92,944 in taxes from the internet giant, Le Parisien reported. 
 
More than 400,000 adverts for short-term rentals in France were put up on the site last year and Paris is the company's biggest city for listings, with 60,000 adverts posted in 2016. In total around ten million travellers use Airbnb's France site each year.
 
And while €92,944 is certainly an improvement on the amount paid by the company in 2015, when just €69,168 was handed over in taxes, it still only amounts to the tax bill normally paid by an SME (small and medium-sized enterprise) in France.
 
But there is nothing illegal about what Airbnb is doing, instead, like many other multi-national companies, including other internet giants, the web platform is using a beneficial tax arrangement that means it can grow its global market without being smacked with a huge tax bill. 
 
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Basing its European headquarters in Ireland where businesses are taxed 12.5 percent – one of the lowest tax rates on the continent – Airbnb processes the invoices from its bookings in France through its British and Irish subsidiaries. 
 
While in France, the company's operations are limited to a marketing team.  
 
“In France, we tax according to 'stable business' status, meaning the presence of people and machines in the country,” Eric Woerth, president of the finance commission at the National Assembly told Le Parisien.
 
“The problem with the internet industry is that companies do not have a significant number of employees or machines in France.”
 
And it doesn't look like the situation is likely to end any time soon.
 
As Airbnb grows and increases its offering, adding experiences like cooking classes in Paris, kayaking in Cassis and sailboating on the Mediterranean to its catalogue, it seems unlikely the company's tax bill will rise significantly. 
 
While the company defends its position, arguing that it contributed €6.5 billion to the French economy in 2016, bringing in tourists who then go to restaurants and shop, unsurprisingly the hotel industry is up in arms.
 
During his campaign for the French presidency earlier this year, Emmanuel Macron said that the battle against beneficial tax arrangements would be a priority in Europe. 
 
“We will fight, at a European level, for a tax on business revenue made by online service companies. This will eliminate the possibility of sending profits to a tax haven,” Macron said. 
 
But whether the new French president will be able to convince other European countries to impose new tax rules on internet giants remains to be seen.

RENTING

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.

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