Over BGN 4 million in income has been declared by owners who provide real estate to accommodate tourists through the Airbnb platform, the National Revenue Agency announced. Income taxation of this activity was introduced in February 2020 – about a month before a state of emergency was declared in Bulgaria due to the pandemic, which effectively put tourism on hold.
It is understood from the announcement that the money was collected after the National Revenue Agency received information from Airbnb and the authorities in Ireland about the properties rented in Bulgaria and started proceedings against the landlords.
The Revenue Agency recalls that short-term real estate provision through online platforms is subject to certain taxes (patent tax, or personal income tax, or corporate tax, or VAT) and social security contributions. This activity is hotel accommodation, and in most cases is defined as commercial in the sense of the Commercial Law and is subject to mandatory VAT registration for the so-called supplies of services for which the tax is due from the recipient, reminded by the Revenue Agency.
This is because landlords use intermediary services on platforms as recipients of a taxable supply of a service that takes place in the country and is provided by a foreign person (online platform) established in another country. In addition, after registration, there are obligations to submit monthly VAT returns, respectively sales and purchase diaries.
Through the existing instruments for international cooperation, the NRA has the opportunity to receive through the Irish Tax Administration from Airbnb information about all Bulgarian users who have rented short-term properties in the platform – properties and their addresses and the number of commissions paid by them.
Based on the information received for the period 2015 – 2019, control proceedings have been initiated against people for whom there is a risk of non-declaration of the amounts received from short-term rental of real estate through the Airbnb platform. In the course of these proceedings, they have voluntarily declared income in the amount of over BGN 4 million.
“Despite the fact that we have all the information about landlords, short-term rental properties, and revenues, our efforts are not focused on inspections and audits, but on the voluntary declaration. Our aim is to support the notion that it is not only right but also easier for individuals and legal entities to work in the light and that this has a positive impact on establishing a better common business environment,” said NRA Deputy Executive Director Georgi Dimov, quoted by his press center.
A year ago, the patent tax for short-term accommodation in Sofia was reduced to BGN 25 per room. Prior to that, it was BGN 250, after the Tourism Act stipulates that the tax could be in the range of BGN 25-250. The reason for the reduction was the pandemic, which hit this business as well.