A significant part of the revenue earned by people who rent out apartments on Airbnb is never reported to the tax authorities. The Icelandic Directorate of Internal Revenue believes that at least 15% of the most active Airbnb operators, those who rent out five or more apartments, fail to report their full income to the authorities. The rate of tax-fraud is higher among smaller operators, the IDIR believes. More than 70% of Airbnbs have not been registered with the authorities.
A major industry
According to recent estimates nearly one in two foreign visitors to Iceland stay at Airbnbs. The turnover of Airbnbs in Reykjavík in 2016 is believed to have been at least 6 billion ISK (57 million USD/49 million EUR).
Read more: Growing popularity of Airbnbs: 43% of all foreign visitors in Reykjavík stay in Airbnbs
The IDIR monitors booking sites like Airbnb and Booking.com to keep track of properties which are being rented out to foreign visitors. A total of 4.163 individuals rented out apartments at the end of August. The vast majority had only one apartment or room for rent, most only part time. However, ca 1,000 individuals rented out more than one property. Out of these 100 could be classified as major operators, each with five or more properties for rent.
Widespread tax evasion
The director of the revenue service tells the Icelandic National Broadcasting Service that the IDIR monitors these operations more closely.
These individuals are engaged in significant business operations, and therefore we expect them to comply with all rules and regulations when it comes to accounting and other such things, but our checks have revealed various irregularities or problems in 15% of the cases we have checked.
The IDIR suspects that the rate of tax-evasion and irregularities is even higher with individuals who rent out fewer than 5 properties. Since the revenue service has not yet conducted any studies it is impossible to estimate the size of the problem. The revenue service has called for clearer legislation so the IDIR could compel Airbnb and other booking sites to hand over information about individuals who rent out apartments and the revenue they receive.
A significant part of the revenue earned by people who rent out apartments on Airbnb is never reported to the tax authorities. The Icelandic Directorate of Internal Revenue believes that at least 15% of the most active Airbnb operators, those who rent out five or more apartments, fail to report their full income to the authorities. The rate of tax-fraud is higher among smaller operators, the IDIR believes. More than 70% of Airbnbs have not been registered with the authorities.
A major industry
According to recent estimates nearly one in two foreign visitors to Iceland stay at Airbnbs. The turnover of Airbnbs in Reykjavík in 2016 is believed to have been at least 6 billion ISK (57 million USD/49 million EUR).
Read more: Growing popularity of Airbnbs: 43% of all foreign visitors in Reykjavík stay in Airbnbs
The IDIR monitors booking sites like Airbnb and Booking.com to keep track of properties which are being rented out to foreign visitors. A total of 4.163 individuals rented out apartments at the end of August. The vast majority had only one apartment or room for rent, most only part time. However, ca 1,000 individuals rented out more than one property. Out of these 100 could be classified as major operators, each with five or more properties for rent.
Widespread tax evasion
The director of the revenue service tells the Icelandic National Broadcasting Service that the IDIR monitors these operations more closely.
These individuals are engaged in significant business operations, and therefore we expect them to comply with all rules and regulations when it comes to accounting and other such things, but our checks have revealed various irregularities or problems in 15% of the cases we have checked.
The IDIR suspects that the rate of tax-evasion and irregularities is even higher with individuals who rent out fewer than 5 properties. Since the revenue service has not yet conducted any studies it is impossible to estimate the size of the problem. The revenue service has called for clearer legislation so the IDIR could compel Airbnb and other booking sites to hand over information about individuals who rent out apartments and the revenue they receive.
