Denmark is imposing a requirement to Airbnb to report the income tax of homeowners to tax authorities automatically, making it the first nation to deal with the tax evasion issue that is linked to the service.
The said agreement still needs to be approved by the Danish parliament. It is introduced after a cap that was set on how many days the homeowners are allowed to rent out their homes in the country.
The limit will be set to 70 days every year in which a homeowner may rent out his or her home via Airbnb and the owners will be offered a tax-free allowance amounting to 40,000 Danish kroner (£4,688) every year.
The tax minister of Denmark, Karsten Lauritzen, stated: “We want a flourishing sharing economy in Denmark where it is possible for renters to earn a reasonable tax-free amount on making their property available.”
However, Lauritzen said: “But it is must be under the condition that tax payments are in order.
The tax evasion issue that involves Airbnb has become a serious problem in various countries and the firm has also been accused of pushing up the prices of houses in larger cities and taking away some business from the hotels.
In a company statement, the director of public policy EMEA at Airbnb, Patrick Robinson, said: “We believe the proposed rules are right for Denmark and we are committed to ensuring hosts on Airbnb can benefit from these innovative and forward-thinking rules.”
He added: “The progressive attitude of Denmark is an example to the world and demonstrates how positive results can be achieved when policymakers and Airbnb work together on the shared goals of making cities better places to live, work and visit.”
Airbnb has disclosed that 30,000 people in Denmark rented out their homes during the previous year to approximately 900,000 visitors.