Airbnb has paid an additional £1.8m in tax following an investigation by HM Revenue and Customs into its UK tax arrangements.
It also said it was cooperating with HMRC to share data on the money made by Airbnb hosts – who are believed to number around 225,000 in the UK alone – in the tax years 2017-18 and 2018-19
The figures, disclosed in the holiday accommodation firm’s recently filed 2019 UK accounts and first reported by Reuters, come amid concern that globalised digital companies are failing to pay their fair share of local corporation taxes, and that personal income earned by hosts renting out apartments may not be fully disclosed to the tax authorities.
The £1.8m extra corporate tax bill paid by Airbnb comes on top of a £1.1m tax bill it paid on profits of £5.6m reported by Airbnb UK in 2019.
Airbnb admitted in 2018 that its tax arrangements in the UK were in the spotlight, warning in its filed accounts that it had been contacted by HMRC “regarding the application of tax laws or regulations impacting the company’s business”.
In its latest filings, it said: “During 2019, the company received a revised assessment from HMRC which resulted in additional tax payable of £1.8m.”
Airbnb said it “pays all applicable taxes”. In a statement, it said: “The Airbnb model boosted the UK economy by more than £5bn in direct economic impact last year alone, providing hosts the opportunity to earn extra income and communities a way to get their economies running again. The overwhelming amount of money generated by the Airbnb platform stays within UK communities, with hosts keeping up to 97% of what they charge.”
It added: “We are committed to working in partnership with governments … and we will continue to work collaboratively with HMRC.”
Obtaining a full picture of Airbnb’s turnover and profits is difficult because revenues earned in the UK and everywhere outside the US and China go through its Irish arm, Airbnb International UC. It has its registered office at a former warehouse in Dublin’s docks, although its official business address is given as St Helier, Jersey, while its bankers are listed in London.
Airbnb has two UK entities, Airbnb UK and Airbnb Payments UK, both of which provide services to Airbnb International UC. In the case of Airbnb Payments UK, its “revenue” largely consists of a fee paid by Airbnb International UC for processing payments of UK customers.
The last publicly available accounts from Ireland’s equivalent to Companies House, the Companies Registration Office, show that in 2018 Airbnb International UC had a turnover of $2.4bn, a sharp increase on 2017’s $1.8bn.
Airbnb was expected to float on the stock market in 2020, with valuations of the business ranging from $18bn towards $40bn, but coronavirus hit the business hard and in May it cut 1,900 jobs, or about 25% of its workforce. At the time it forecast revenues in 2020 would be half the $4.8bn generated in 2019.
In many cities, such as London and Edinburgh, Airbnb hosts starved of tourists have returned their properties to the longer term rental markets, helping to ease pressure on local rents. But in other areas demand for Airbnb properties has remained robust, partly because holidaymakers have been avoiding hotels where they may have issues maintaining social distance.