Tax obligations for providers of accommodation services
Similarly to the recent issue for providers of transport services, the General Financial Directorate has now issued Information on the tax assessment of the obligations of providers of accommodation services when using intermediary platforms such as Airbnb or Booking, again with retroactive effect to 1 January 2023.
For VAT purposes, it is essential that this type of services should be considered as accommodation services and not as rental of premises, even if the provider does not have the relevant trade licence. The provider of accommodation services is thus to be regarded as a taxable person, and if the turnover exceeds CZK 2 million for the last 12 months, the accommodation provider will be obliged to register as a VAT payer. From the perspective of the accommodation provider, it may be advantageous to register as a VAT payer voluntarily, as the provision of accommodation services currently falls under the reduced 10% tax rate and also allows the related input tax deduction to be claimed. The accommodation intermediary platform then provides an electronic service and if the recipient is an accommodation provider, it is the accommodation provider who is obliged to pay domestic VAT and, if applicable, register as an identified person for this purpose. If the recipient of the service of the platform is a lodger who uses the service as a domestic non-taxable person, the operator of the intermediary platform will declare VAT; if the lodger is in the position of a domestic taxable person, it will again be him who will be obliged to declare VAT and possibly register as an identified person.
Income tax obligations
Entities providing accommodation through AIRBNB and other platforms are treated as ordinary personal income tax payers. For correct assessment of the taxation regime of income from these platforms, the most important thing is the nature and duration of the accommodation provided, i.e. whether it is for the long-term housing needs of the tenant (his/her household) or for temporary or short-term accommodation for the purpose of e.g. recreation, accommodation of students, seasonal workers, etc. For the provision of accommodation services (AIRBNB), it is typical to provide cleaning of the premises used by the customer, provision of bed linen, change of bed linen, toiletries or even provision of meals. The lease relationship does not generally provide for the provision of such services over and above the lease, therefore the “accommodation” cannot be considered as mere rent. If the provider of this accommodation is a natural person, the income from this activity is subject to personal income tax under Section 7 of the Income Tax Act.
If the taxpayer holds a trade licence, he/she may apply a flat-rate expenditure of 60% against income from accommodation services. If he does not hold the relevant trade licence (although he is obliged to do so), he is entitled to claim expenses as a percentage of his income at 40%, if he does not have claim the actual expenses.
To make the picture complete, we add that this income is also subject to social security and health insurance contributions. If the taxpayer meets the statutory conditions and is not obliged to register as a VAT payer, he/she can enter the flat-rate tax regime and does not have to file an annual personal income tax return.
In case of any questions on this topic, we will be happy to be at your service.
Author: Richard Knobloch, Vladimír Toráč