Income Taxation From Airbnb?

Do you rent an apartment through Airbnb? If so, how do you pay tax on your income?

Income From Rent or Self-employment?

Government anti-epidemic measures over the past two years have severely restricted not only travel but also accommodation. The aforementioned restrictions have not only affected traditional hotels and guesthouses, but also those who rent out their properties through various online platforms, typically Airbnb. In connection with this new type of renting, a number of questions have arisen as to how landlords, i.e., natural persons should pay tax their income earned. A clear answer has now been provided by the Prague Municipal Court.

There were two opinions on the taxation of the mentioned income from Airbnb and similar platforms. One group was inclined to the view that it was rental income, i.e., income under Section 9 of the Income Tax Act. A second group, on the other hand, took a different view, namely that it should be considered income from self-employment (Section 7 of the Income Tax Act).

Taxing this income as rental income is more advantageous for the vast majority of taxpayers, despite the fact that a lower flat rate (30% of income) can be applied. This is because in the case of self-employment, the income is subject to social security and health insurance contributions, which is an additional expense for the landlord. The second factor is the possible compulsory registration for value added tax (assuming all legal conditions are met, of course).

According to the Municipal Court in Prague, It Is an Independent Activity

A specific case where the taxpayer and the tax administrator disagreed on the classification of the income has now reached the Municipal Court in Prague. In particular, the court considered the nature of the activity and its longevity. In this particular case, it subsequently concluded that it was the provision of short-term accommodation (not long-term renting) which was done on a continuous basis for profit, on the taxpayer's own account and responsibility.

According to the opinion of the Municipal Court in Prague, renting through platforms such as Airbnb is an independent activity (not renting). This is a landmark ruling that will certainly affect a number of taxpayers.