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France: The French Senate has approved measures to implement tougher taxation on short-term rental platforms such as Airbnb in order to address a perceived “distortion of competition” compared to the country’s hotel sector.
Going against the recommendations of the French Government, the Senate approved amendments to a Finance Bill which will come into effect next year. It includes taxing short-term rentals with VAT [value added tax] as hotels in France currently are, and the stance is being principally driven by the liberal-conservative Les Républicains and Communist group.
Under the current legislation, short-term rentals can only be taxed with VAT if they specifically provide breakfast, regular cleaning services and household linen, making it a relatively rare occurrence in France.
French Communist Party MP Ian Brossat has been one of the most vocal opponents of the stricter taxation measures, calling it an “excessively favourable tax system for tourist rental platforms, to the detriment of housing and the hotel industry”.
Although the Senate has approved the measures, it will ultimately be up to the government to decide on the potential legislation. It can either enact its own legislation without a vote taking place in the French National Assembly or reject the measures that were approved by the Senate by invoking Article 49.3 of France’s Constitution.
The measures are set to be discussed again in a public session in the National Assembly next week.
It comes as Airbnb and other short-term rental booking platforms brace themselves for the enforcement of tighter regulations in Paris and other cities in France, ahead of next summer’s 2024 Olympic and Paralympic Games. According to reports, the government is preparing to sign a charter before the end of the year that will require platforms to display notifications on listings in Paris that are being priced significantly higher than those of a similar size for stays between 26 July and 11 August – the dates when the 2024 Olympics will be held.
At the same time, Airbnb co-founder and CEO, Brian Chesky, has urged residents in Paris to put their homes up for rent on a short-term basis during the 2024 Olympics, with up to half a million people expected to book via the platform for the duration of the Games.
The potential legislation would likely come into effect by the start of 2024.
France is also not the only country targeting Airbnb and similar platforms with taxation measures.
Earlier this month, a judge in Italy ordered the seizure of €779.5 million [£676.8 million / $831.6 million] from Airbnb’s European headquarters in Ireland over a probe into alleged tax evasion. In a statement released by prosecutors, it was alleged that Airbnb had failed to collect a mandatory 21 per cent of landlords’ rental income [the income is said to have come in at around €3.7 billion] and pay it to the Italian tax authorities, as per a 2017 law in the country.
In addition, three unnamed people who served in managerial roles at Airbnb between 2017 and 2021, the period during which the violation is alleged to have place, were placed under investigation.
Meanwhile in Canada, lawmakers have agreed to impose new measures that limit income tax deductions on short-term rentals booked through platforms such as Airbnb and Vrbo, in a bid to ease the country’s affordable housing shortage.
