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Ireland: Tax Treatment For Short Term Rentals



Yesterday, Revenue eBrief No. 59/18 was published. This comprehensive nine-page document outlines the tax treatment for income arising from the provision of short-term accommodation:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-20.pdf

A short-term letting is defined as a letting of all or part of a house, apartment or other similar establishments:

– As a tourist, holidaymaker or other visitor
– For a period which does not exceed or is unlikely to exceed 8 consecutive weeks

There are a number of different circumstances which will be covered by this new guidance material including

(i) Persons staying in hotels, guesthouses, B&Bs, hostels, etc.,
(ii) Persons either sharing a property with the owner or occupying the whole property for a short period of stay or
(iii) Persons occupying self-catering holiday accommodation for short periods

If your rental income meets the criteria outlined in this document, you could be looking at an obligation to register for VAT depending on your turnover as well compliance obligations under Cases I or IV Schedule D.

In addition to the annual tax on the rental profits and the potential VAT exposure, you could encounter a Capital Gains Tax liability on the sale of the property generating this rental income which might otherwise have been tax exempt.

This document has clarified situations where Rent-a-Room Relief will not be available. Specifically, if you are someone who rents out one or more rooms in your home through online accommodation booking sites you will not be entitled to the Rent-a-Room Relief. Instead, you may be treated as if you are carrying on a trade with an obligation to register an account for Income Tax and/or VAT.

If you provide short-term rentals to tourists, guests or visitors where the room or property is available for rent on a regular or frequent basis with a view to making a profit and involves you, the owner, carrying out some or all of  the following activities then you may be deemed to be carrying on a trade and if so, this document is relevant to you:

  1. Advertising the property online on accommodation booking websites
  2. Dealing with booking inquiries, reservations and payments
  3. Arranging for cleaning, laundry, and maintenance during and between lets
  4. Providing meals
  5. Providing information to visitors about local tourist attractions, restaurants etc.
  6. paying staff to provide such services, etc.

Have questions? Contact Claire McNamara.

 

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Since founding Accounts Advice Centre in Dublin in 1996, Claire McNamara has established a reputation for successfully advising businesses, corporate and personal tax clients. Her knowledge spans various sectors and her experience includes corporate transactions, inheritance tax planning, International Tax Treaties, personal tax as well as advising on issues affecting non domiciled individuals and offshore clients. She constantly delivers a value added service and efficient tax management solutions to high net worth private clients, property owners, executives, entrepreneurs, entertainers and members of various professions.

As a Chartered Tax Adviser, Claire has considerable experience in professional practice and will personally help you to deal with all your tax affairs competently, professionally and successfully. She has also lectured extensively in taxation on courses for the main professional accountancy qualifications including A.C.C.A., A.C.A. and C.P.A. and is actively involved in preparing students for the Irish Tax Institute’s CTA qualification.

Claire has effectively handled a number of Revenue Audits and Appeals on behalf of her diverse client base and has successfully negotiated solutions resulting in substantial differences to the eventual tax liability, surcharge and penalties.

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