08.08.2017

France: the Giant Airbnb pays taxes as a small company

400France is Airbnb's second largest market and yet in 2016, the internet giant paid the country just €92,944 in taxes – equivalent to the amount paid by small and medium-sized enterprises (SMEs).
With 350,000 listings, France is Airbnb's second-largest market after the United States, and Paris, the most visited city in the world, is its biggest single market, with 65,000 homes.

However, during 2016 France received only €92,944 in taxes from the internet giant, Le Parisien reported. And while the 2016-sum is certainly an improvement on the amount paid by the company in 2015, when just €69,168 was handed over in taxes, it still only amounts to the tax bill normally paid by an SME (small and medium-sized enterprise) in France.
 
But there is nothing illegal about what Airbnb is doing, instead, like many other multi-national companies, including other internet giants, the web platform is using a beneficial tax arrangement that means it can grow its global market without being smacked with a huge tax bill. 

Basing its European headquarters in Ireland where businesses are taxed 12.5 percent – one of the lowest tax rates on the continent – Airbnb processes the invoices from its bookings in France through its British and Irish subsidiaries. 
 
While in France, the company's operations are limited to a marketing team.  
 
"In France, we tax according to 'stable business' status, meaning the presence of people and machines in the country," Eric Woerth, president of the finance commission at the National Assembly told Le Parisien.
 
"The problem with the internet industry is that companies do not have a significant number of employees or machines in France."
 
And it doesn't look like the situation is likely to end any time soon.
 
As Airbnb grows and increases its offering, adding experiences like cooking classes in Paris, kayaking in Cassis and sailboating on the Mediterranean to its catalogue, it seems unlikely the company's tax bill will rise significantly. 

While the company defends its position, arguing that it contributed €6.5 billion to the French economy in 2016, bringing in tourists who then go to restaurants and shop, unsurprisingly the hotel industry is up in arms.
 
During his campaign for the French presidency earlier this year, Emmanuel Macron said that the battle against beneficial tax arrangements would be a priority in Europe. 
 
"We will fight, at a European level, for a tax on business revenue made by online service companies. This will eliminate the possibility of sending profits to a tax haven," Macron said. 
 
But whether the new French president will be able to convince other European countries to impose new tax rules on internet giants remains to be seen.


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