Additional Tax Obligations of Airbnb Short-term Rentals
At the beginning of August, the Municipal Court of Prague was hearing a case involving a Prague resident. The fact is that she rented out her apartment through the Airbnb platform.
However, the Financial Administration considered that in the case of daily rentals, the activity of the citizen should be classified as a business activity - in the field of services related to the provision of accommodation. In this context, a request was made for the payment of the relevant taxes and fees. The Prague Municipal Court fully upheld the action brought by the tax administration, arguing that there is a big difference between a classic apartment rental and a short-term rental. In the case of short-term rentals, it is primarily the provision of a number of services connected with the offering of accommodation. For example, it can include the provision of toilet paper, soap, towels, cleaning, meals and other guest services. In the case of a traditional rental, the main purpose of the relationship between the parties is the use of the apartment for permanent residence for a certain price. This means that the landlord will not be in the business of providing housing-related services, but will only receive income from other activities.
It should be noted that short-term rental operators have to pay additional fees to the social and health insurance funds and also to the State VAT at the rate of 15% of their income if the turnover overtake 1 million of Czech crowns in the last 12 months. Those who rent out an apartment in the traditional way are exempt from this, as well as from the obligation to pay VAT to the state. When the additional fees and taxes are added to the need to communicate with guests on a daily basis, it is worth asking what is more profitable: to rent an apartment on a long-term basis and not have the hassle and additional costs, or to take the risk and rent an apartment through Airbnb. The decision is up to you - if you decide to buy, sell or rent a property long-term, we would be delighted to help.
