Airbnb: it is all there in the Revenue rules

There probably should never have been any confusion about the tax treatment of Airbnb income. The Revenue Commissioners issued perfectly clear guidance in February, effectively dashing the hopes of anyone who had dared to dream of a tax-free windfall from short-term letting out of a room in their home through the online hospitality business.

Revenue clarified that short-term lets had never fallen within the remit of the 2002 rent-a-room scheme, which allows people to receive income of up to €12,000 in any tax year without that money being liable to income tax, PRSI or the universal social charge (USC).

Anyone letting out their home through online accommodation booking sites was therefore required to treat any rental received as trading income, just as if they were running a guesthouse.

But not everyone spends their days reading Revenue "e-briefs". Not even Government Ministers, it seems. Twice in early July, Minister for Finance Michael Noonan referred to the explanatory "e-brief" when he answered parliamentary questions about the tax treatment of Airbnb income. He gave the same response to his Fine Gael colleague Olivia Mitchell on July 7th as he did to Independent TD Shane Ross on July 9th.

“I have no plans to extend the rent-a-room scheme to include guest accommodation lettings under Airbnb,” Noonan said. “This scheme is intended to increase the supply of rental accommodation by incentivising homeowners to rent out rooms in their principal primary residences to individuals on a residential basis.”

In August, Airbnb contacted users telling them it would supply Revenue with details of income generated by users in the Republic going back to May 1st, 2014. It said host income had always been taxable and it had always made that clear. The reporting obligation was driven by the fact that from that date, Ireland his prompted fears of hefty retrospective tax bills.

Freedom of Information records show the extent to which the issue has exercised TDs, members of the Cabinet and their constituents.

Former minister for justice Alan Shatter wrote to Noonan on July 20th, saying a constituent "wants to know whether changes can be made to current rules to allow such income be included in Revenue's rent-a-room scheme and thereby tax exempt".

Taoiseach Enda Kenny, Minister for Jobs Richard Bruton and Minister for Communications Alex White also contacted Noonan with similar queries. Noonan's response was unwavering. He echoed the Revenue line.

Airbnb has made clear it will work with members of its “community” to examine how it might advocate on their behalf with Revenue and the Government before the budget.

The accountancy firm Ernst & Young has told Airbnb it believes the Revenue is mistaken in saying the rent-a-room tax allowance does not apply to people who use the website to rent their properties to guests.

Under (FoI) legislation, The Irish Times sought all correspondence on the subject of Airbnb between the Department of Finance and the Revenue, the Department and Airbnb and the Department and Ministers and TDs.

Several documents were heavily redacted on the grounds that access would involve disclosure of personal information or relate to the Department of Finance’s deliberative processes.