Airbnb shut out of rent-a-room relief

Posted on 23 October 2018

Finance Minister Paschal Donohoe moved to shore up the short-term lettings incentive so home-owners using Airbnb and other tourism rental platforms do not benefit from the tax exemption granted under the existing rent-a-room relief.

An amendment to the Finance Bill, which was published yesterday, strips the right to the exemption by applying a 28-day rule.

“Rent a Room was aimed particularly at the student digs market. The new ‘28-day rule’ confirms the Revenue interpretation that Airbnb lettings were not exempt from tax,” said Brian Keegan, director of public policy and taxation at Chartered Accountants Ireland. There were few other notable amendments or additions in the bill–which is designed to give the legal clout to last week’s budget, and the 150-page document was short compared with previous years, Mr Keegan said.

He said that changes to existing tax relief for investing in SMEs and promoting the film industry were “modest” and in some instances clearance from the EU Commission will be required, adding that “even though improvements such as the regional boost for filmmakers are on the statute books, they will not take effect for some time if at all”.

The Finance Bill said applications for incentives for regional films will be assessed on whether the production is “substantially” based in the region and whether training will be given for individuals “that habitually reside within that 45-kilometre radius”.

Mr Keegan said the availability of an existing three-year tax holiday for new companies is being extended to 2024.

There are no new incentives to develop the property construction or rental market at a time of crisis in the housing sector. The industry had been looking for improvements to the Capital Gains Tax regime for entrepreneurs, which has not figured’

Mr Keegan said

“An opportunity to correct a defect in the law which created a tax trap for individuals in a management buy out has been missed. Nor is there any sign of measures to simplify or defer the collection of Vat on imports from the UK when that country leaves the EU,” he said.

Keith Connaughton, tax partner at PwC, said: “The Government made it very clear that the bill wouldn’t be used to bring about unflagged amendments to existing provisions, and so it proved to be.”

Deloitte said there will be a lot of change to Ireland’s tax rules, with respect to controlled foreign company rules, investment in corporate trades and several amendments to exit tax rules.


Source: -Eamon Quinn and Geoff Percival 19th October 2018