UK landlords who own holiday rentals in European Union countries may soon face the obligation of paying VAT on rental income. This rule applies to landlords who use digital platforms like Airbnb for renting out properties.
According to Tax Assist Accountants, this change will significantly impact landlords based in the UK who operate holiday rentals in the EU. Starting in 2025, landlords renting holiday accommodations in the EU will be required to pay a standard 20% VAT, irrespective of their residence in the same country or outside the EU.
According to the EU, around 70% of accommodation providers utilizing platforms like Airbnb and Booking.com are not registered for VAT. These providers will be required to inform the relevant member states about their VAT registration status, including those acting as local agents for landlords in EU countries who do not yet have VAT numbers.
Tax Assist Accountants clarifies that since the UK exited the EU in January 2020, this change will not directly affect landlords of accommodations in the UK. However, the company cautions that HM Treasury might monitor the effectiveness of the EU’s Digital VAT and could potentially introduce similar measures in the future.
In addition to the impact on UK landlords, the European Union estimates that a significant portion of accommodation providers utilizing on-demand platforms like Airbnb and Booking.com, approximately 70%, are currently not registered for VAT.
To address this, these providers will be required to notify the relevant member states about their VAT registration status. This requirement also applies to firms that act as local agents for landlords in EU countries.
While the implementation of VAT on rental income will not directly affect landlords of accommodations in the UK due to its exit from the EU in January 2020, Tax Assist Accountants suggests that HM Treasury might monitor the effectiveness of the EU’s Digital VAT system.
This monitoring could potentially lead to the introduction of similar measures or adaptations in the UK in the future. It is important for landlords to stay informed about any developments or changes in taxation regulations to ensure compliance with their obligations.
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