In Amsterdam, there are many individuals who make rooms available within the context of “Bed & Breakfast”. The biggest platform used for this is Airbnb. Under certain circumstances, the income must be declared to the tax authorities. But what are the tax rules?
In Amsterdam, there are many individuals who make rooms available within the context of “Bed & Breakfast”. The biggest platform used for this is Airbnb. Under certain circumstances, the income must be declared to the tax authorities. But what are the tax rules?
Situation 1. Temporary rental
If the own home is occasionally made available in its entirety as part of Airbnb, the rental income of 70% should be entered in Box I; the associated costs of gas and electricity are 100% deductible. In this situation, the mortgage remains deductible as usual. The tax liability of the notional rental value remains. This is the scheme for temporary rental. You can think of making the property available for a few weeks during the holidays.
The room rental exemption with Airbnb is not applicable, as this exemption does not apply to temporary rental.
Situation 2. Profit from other activities
In general, income from Bed & Breakfast is taxable as income from other activities. Short-term rentals, after all, require some work, such as scheduling reservations, receiving guests, washing linens, cleaning and taking care of breakfast. These activities normally go beyond normal asset management. If the income is taxed as income from other activities, the progressive tax rate is applicable. This means that the income is taxed in the same way as earned income, for example, with a rate of up to a maximum of 49.5%.
Situation 3. Business profits
Should the Bed & Breakfast generate substantial income, and in the event that certain conditions are met, the revenue/ income may yield business profits. The tax regime for these business profits will be nearly equal to that for revenue generated from other work. The main advantage of treating the income as business profits is that this allows for a number of tax deductions, such as the SME-profit exemption. Based on the SME profit exemption, a specific portion of the profits is not subject to tax (in 2020: 14% of the profit).
Situation 4. Income from savings and investments (Box 3)
Under some circumstances, income from the Bed & Breakfast can be covered by box 3. If the conditions are complied with, the income is no longer taxable, but the value of that part of the property used for the Bed & Breakfast is taxed at the fixed rate of Box 3. A tax liability for (that part of) the home is deductible from the declared value. For instance, if the part of the home used for the Bed & Breakfast is worth €50,000, then in Box 3 €690 tax is owed (at a Box 3 rate of 1.38%). Note that no costs of interest, electricity, water and the like are can be deducted. In future taxes on Box 3 income may go up because of a change in tax legislation.
It is not easy to get the income to fall into Box 3. The tax authorities will quickly maintain that this is from activities and that the income must, therefore, be taxed as income from other activities. For the income to be applicable for Box 3, it must be assumed that the person who makes a part of the house available performs no or hardly any work within the framework of Bed & Breakfast.
Besides the income tax, you may also be liable for sales tax. In this article, we restrict ourselves to the tax aspects of the income tax.
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Jan Jan Jansen
Tax Lawyer/divorce advisor
