I. Initial situation
Airbnb and other platforms for the (short-term) rental of (vacation) apartments have been booming for several years in connection with the triumph of the so-called sharing economy. For many private and commercial landlords, such platforms represent a convenient way to offer living space easily and cheaply on the market.
But (tax) authorities have also targeted the sector, suspecting violations of (local) use bylaws on the one hand and fearing that landlords are not declaring income in full for tax purposes on the other.
In this context, Airbnb in particular has been the target of requests for information from German authorities on several occasions in recent years.
II. Success for Hamburg tax investigation – international group request obliges Airbnb to disclose data
According to a press release dated September 2, 2020, the Servicetelle Steueraufsicht Hamburg, a special unit of the tax investigation department, in cooperation with the Federal Central Tax Office (BZSt), various other German states and the tax authorities of the country of domicile of the intermediary portal for the German tax administration, has achieved in proceedings lasting several years before a court in Ireland that data of landlords are transmitted for tax control purposes.
This means that the tax authorities have data on German landlords who have rented out via Airbnb. This typically includes name, addresses, and rental sales. This data is now being evaluated by the Hamburg tax investigation department. Insofar as landlords outside Hamburg are affected, the data will be forwarded at short notice to the responsible federal states for further review.
III. legal basis
Group requests have their legal basis in Article 26 of the double taxation treaty agreed with the respective state. The requirements for this are basically comparable with so-called collective requests for information under the German Fiscal Code (Abgabenordnung).
The competent Irish court evidently considered the requirements for a corresponding international group request to be met.
Landlords of apartments (or even individual rooms) generate income from renting and leasing. Under certain conditions, there may also be commercial income that triggers trade tax. In addition, sales tax is regularly incurred in the case of short-term accommodation of strangers.
If the corresponding income or sales have not been properly declared for tax purposes to date, there is a considerable risk that the tax authorities will assume that tax evasion is a criminal offense and will initiate corresponding investigation proceedings.
In addition to the payment of back taxes (in individual cases, it is even conceivable that undeclared rental income could be taxed up to thirteen years into the past), there is also the threat of sanctions ranging from fines to prison sentences.
IV. Consequences and recommendation for action
The Hamburg tax investigation office will now evaluate the data and, if necessary, also pass on data to corresponding offices in the other federal states.
As a result, individual requests for information or a comparison by the tax offices is to be expected as to whether the individual landlords have correctly declared corresponding income in the current tax returns of recent years.
There is therefore an urgent need for action for landlords who have so far provided incorrect information on income from rentals via corresponding platforms in their tax returns or have not declared this income at all. With the purchase and analysis of tax CDs from Switzerland, the tax authorities have already shown that they are able to process mass cases quickly.
The press release of the Hamburg tax investigation office can also be seen as an indication of the need for action on the part of landlords and thus as a “golden bridge” back to tax honesty. Therefore, income or sales from rentals that have not yet been declared should be reported without delay – in particular to minimize criminal law risks.
A corresponding information letter to the competent tax office should generally be designed in such a way that it also fulfills the strict formal requirements for a voluntary disclosure exempt from penalties or fines. In this respect, case law and legislators have considerably tightened the requirements in recent years, so that specialists should be involved in the preparation of the letter.
As long as the data has not been forwarded to local tax offices and, in particular, has not been reconciled with the tax returns of the individual landlord, we do not believe that a crime has yet been discovered. This would mean that a voluntary disclosure exempting from prosecution would still be possible in principle.
The longer landlords wait now, the more the risk increases that an exempting self-disclosure is blocked, e.g. due to the discovery of a crime. Even if, in individual cases, a crime is discovered, in practice a late self-disclosure leads to considerable reductions in penalties and even to the discontinuation of preliminary proceedings.
KPMG Law has a nationwide team of highly specialized criminal tax lawyers with extensive experience in mass cases (in particular voluntary disclosures of foreign accounts). We are happy to provide short-term support in discussing and implementing a protection strategy in a specific case.
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Munich Site Manager
Head of Criminal Tax Law
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Head of Criminal Tax Law
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