Airbnb Taxes Non-EU resident VAT

eire2009

Hi all,

The answer to this question is not readily available online.

I'm in Australia resident, domiciled, Irish citizen and moved to an Airbnb/Short term rental due to needing the house for holidays and the uncertainty and ever changing rental laws.

I was amazed at the actual income, 13'000 euro for a 3 bed in Dublin for 6 weeks, who would pay that to live my shipping container style home with little scrotes hanging around, I have no idea.

-18.5% Airbnb fees (Inc VAT)

-15% Management fees(Inc VAT)

-Cleaning fee, insurance, electricity ,gas, internet, fixture and fittings, etc,etc and etc..

-20% tax

Now the question is should I be collecting VAT @13.5%, I'm under the threshold 37000€ currently but as I'm non EU resident in Australia should I start collecting it and deducting it and should I be charged VAT if I'm non EU resident..

The government is cleaning up on Airbnb rentals, landlords are not getting rich, everyone else is, really is funny how I end up with like 20% after everything when I'm the one putting up the 400k the asset.

Thank you for any replies, if anyone is thinking along the lines of an Airbnb, the little bit extra you get isn't worth the headache, long term rentals are generally hassle free with a steady stream of income.

DFB-D

These are general comments only, there are a lot of factors to consider:

You are possibly conducting a trade in Ireland and need to produce accounts.

As regards VAT, there are specific rules relating to supplies of services and place of supply. It is unlikely that the export rate applies.

There are further rules in relation to non established traders, if they apply the thresholds do not apply, VAT must be charged.

Definitely something for you to seek help with!

eire2009

Well if I do have to employ an accountant, charge/pay VAT and do accounts, there definitely won't be much left.

I've asked the revenue, not sure how helpful they'll be.

If I do have to charge VAT the management fees should be on my income excluding the VAT, am I correct?

Peregrinus

So long as you are below the €37,500 turnover threshold, you are not obliged to register for VAT. This isn't affected by the fact that you are resident in Australia. You may register if you wish, but I doubt that it would be to your advantage.

The 20% tax on gross rent is a withholding tax only. You're liable to income tax in the usual way; the 20% tax withheld is credited against your true liability and, if your true liability is less than 20% of the gross rent, you will get an appropriate refund.

Your true liability is computed on net rent - you can deduct your air bnb fees, property management fees, cleaning, utilities, maintenance, etc. If, as you say, you are only getting 20% of the rent, then allowing 20% for withholding your other expenses must be something like 60% of the gross rent. Not all of these will be deductible - capital expenditure isn't deductible - but probably most will be, so the likelihood is that when you submit a tax return you will get a refund. So worth looking into this.

If you need to employ an accountant to assist with bookkeeping or the preparation of tax returns, the cost of doing that is also deductible.

eire2009

Thanks I hope your correct, VAT isn't exactly straight forward. I never did the withholding and just pay it every year myself by ticking a box done by agent, I know I shouldn't be I don't see any come back or fines as it was always straight forward with **** all expenses paid on time. Now there's a lot more money changing hands but not really much of a change in net profit it's getting tricky to manage..

DFB-D

https://www.boards.ie/discussion/comment/121023632#Comment_121023632

Hi Peregrinus,

That is not strictly true in terms of VAT, there are circumstances when the threshold does not apply. S6(3).

Then you are into the examining the meaning of establishment using caselaw.

VAT is tricky when complications are present and Revenue tend to make decisions in the negative where they don't have prior guidance. There is a good chance the threshold applies if the trade is in Ireland, but the factors need to be examined for risk.

And it's not determinable that the income is case V either, the OP appears to be renting regularly, so that is a risk too, that case I will apply.

I'm not trying to alarm the OP, but the above would be questions I'd need to answer before stating the VAT threshold applies or that it is case I or V.

OP, also there is a new system this year for WHT. You need to consider that too.

eire2009

They still haven't responded to the query. From the revenue website, it states :

However, there are a number of exceptions to the reverse charge rule where non-established traders are required to register and account for VAT in the State, regardless of the level of their turnover.

• engage in the supply of services connected with immovable goods located in the State, including the services of builders, plumbers and the like, estate agents, architects and firms providing cleaning and security services and on-site supervision in relation to the property.

I'm 50-50 with if this applies to me, and from some of the things I've read online about Brexit so are qualified accountants.

eire2009

https://www.boards.ie/discussion/comment/121023632#Comment_121023632

The revenue finally responded after multiple attempts, turns out I need to register regardless of turnover. More money, more problems, more hands out wanting their cut as usual.

A person, while not established in the State, needs to register and account for VAT if that person supplies:

taxable goods to ‘taxable customers’ in the State

or

services to ‘taxable customers’ in the State.

This applies irrespective of the level of turnover.

This would indicate that, irrespective of your turnover or a management company operating this on your behalf, your income as a person, not established in the state,that is providing a service, makes you liable to submit an application for VAT registration.