Airbnb rentals: Income belongs in the tax return

Renting via Airbnb and other platforms: How to avoid severe tax penalties

Why income from sporadic lettings should also be included in your tax return and how you can avoid the worst by filing a voluntary disclosure now

It was a good deal for Lukas and Paul. Phillip had moved out of the shared flat three years ago because he had finally finished his studies. However, instead of looking for a new flatmate, the two friends, who had already been in the job for two years, came up with a great idea: they wanted to rent out the detached room to trade fair guests and tourists via the Airbnb platform. According to the calculation, this would at least double, if not triple, the regular rent and provide the two residents with a handsome additional income.

Income from letting via Airbnb avoids tax

No sooner said than done – Lukas, the main tenant of the apartment, registered on Airbnb, advertised the shared room for subletting and received the first inquiries after a short time. Cool, they thought, and enjoyed the little extra wealth they made from the temporary rental. Around 1,200 euros a month in rental income came in this way. Lukas and Paul divided them up among themselves. Life was beautiful. Too good for such dry topics as taxes from letting and leasing. In other words, no tax office ever became aware of this rental income.

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Severe penalties for tax evasion

They should have been included in the tax return. This is because income from the rental of real estate – even if it is only a single room that is occasionally rented out via Airbnb – must be declared.

At least if the income is over EUR 520 per year and the landlord’s total income is higher than the basic tax-free allowance (2020: EUR 9,408 for singles). Rental income is regulated in § 21 EStG “Income from letting and leasing”, and this also includes the short-term letting of vacation apartments or rooms. If a landlord conceals such income, he is evading taxes and cannot plead ignorance. Serious consequences are imminent. Back payments, interest and late payment surcharges are the lesser of two evils. Much worse are high fines or even up to five, in particularly serious cases up to ten years in prison.

Success for tax investigators: Airbnb must provide insight

But Lukas and Paul, like many other Airbnb landlords who don’t declare their rental income on their tax returns, haven’t had much to worry about so far. It was to their advantage that the Irish-based rental platform has so far seen no reason to grant German tax authorities access to its customer data. The company writes on its website that “income as a host on Airbnb is taxable income [gelten], which may be subject to various taxes such as rent tax, income tax or VAT”. However, Airbnb understandably has little interest in landlords remembering their tax obligations. And the company certainly does not want to disclose customer data. A paradise for tax evaders. However, Hamburg tax investigators did not let up and were ultimately successful. A court in Ireland has now ruled in the last instance that Airbnb must provide information.

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Preventing penalties for tax evasion through voluntary disclosure

So now things could get tight for Lukas and Paul. Because with this ruling, the time of carefree Airbnb landlords who do not pay tax on their rental income is “unfortunately” over. The tax authorities will now evaluate the material from Airbnb. However, it still has to be distributed by the Hamburg tax investigators to the individual federal states and tax investigation offices, so that a certain amount of time remains to prevent the worst consequences of tax evasion. However, this is only possible by means of a voluntary disclosure in which all(!) previously undeclared income (not just that from letting and leasing) is listed in full. Anyone who cheats here too and leaves something out will be fined despite self-disclosure.

Act quickly to avoid penalties

Timing is also important. Because only those who

1. has not yet received an order for an external audit OR

2. could not assume that the tax evasion would be discovered

The mere presence of control material does not automatically lead to the assumption that the evasion has been detected. So just because a landlord has learned that the tax authorities have gained insight, he does not have to assume that they will notice his tax evasion. In this respect, he can still go unpunished even with this knowledge if he makes a voluntary disclosure. Nevertheless, the first point requires haste. This is because the tax offices will soon receive inspection material from the tax investigation department. And at the latest when the question about rental income arrives in the letterbox, it is no longer possible to make a voluntary disclosure.

Corrected tax returns, back payments and interest

A voluntary disclosure can protect you from penalties, but not from back payments and interest. All taxes on the income earned to date must be paid in any case. And interest is also due on the additional payment, currently at six percent per year. However, interest always begins to accrue from March 30 of the following year. So for income tax 2018, which had to be declared in 2019, the interest run began on March 30, 2020.

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If the tax office suspects tax evasion, it may amend the assessments retrospectively for up to ten years. If, for example, the income from 2014 is subsequently taxed and the amended assessment reaches the landlord in October 2020, another 27 percent interest is due on the subsequent payment. If no tax return has been submitted at all, the tax can still be assessed 14 years after the end of the calendar year in question.

Act now and disclose rental income. We can help you!

You can beat the authorities to it by making a voluntary disclosure. Do not take any risks in the hope of not being discovered. It’s better to put your cards on the table and declare all income – both from the Airbnb rental and any other income that may have been overlooked in the past. We will help you to ensure that everything is in order and that you really don’t forget anything. My team and I will determine your income in full and assist you in submitting your corrected declaration.

Other platforms also affected

Incidentally, the regulation does not only apply to income from Airbnb subletting. It can be assumed that the tax authorities will now also request data from other rental platforms. And the ruling by the Irish judges proves them right. So if you also have rental income via other platforms (for example Fewo-Direkt or other portals for vacation rentals), you should also act quickly.

Call us now (02738/6888713) or write to us We will support you competently, quickly and reliably.

Further information on the judgment

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Any questions? Talk to us!

Not sure whether an online tax advisor is right for you or whether you have the technical know-how to handle your taxes digitally in future? You don’t know exactly how your professional dreams can be realized financially or have questions about tax law? We are at your disposal for a non-binding consultation.