France Proposes Value Added Taxes on Airbnb Rentals

The French Senate has greenlit measures to apply value-added tax (VAT) to Airbnb and similar platforms, aiming to address perceived competition imbalances with the hotel sector. 

Under the existing system VAT is levied on furnished tourist accommodations based on specific services like breakfast, regular cleaning, and the provision of household linen. The proposed amendment contends that this is "distortion of competition" between holiday rental companies and hotels, which are already VAT-subject. 

Currently, Airbnb collects tourist tax predetermined by regions (usually 10%) and additional taxes depending on the departments. For instance, the Île-de-France region recently introduced an additional "Grand Paris" tax of 15%. 

Finance minister Bruno Le Mair had suggested increasing taxes on Airbnb rentals, in June this year, to align them with regular, non-tourist rentals. Currently, tourist rentals, including those through Airbnb, enjoy a special tax rebate in France. Le Maire emphasized the need for fairness in taxation and expressed concerns about excessive benefits and favorable tax treatment. 

Despite Senate approval, the government retains the right to reject the measure. The Senate previously endorsed a measure to regulate furnished tourist accommodations by reducing tax deductions in areas with rental pressure.