UK owners of European holiday lets need to consider their overseas tax position

05 December 2023

As jurisdictions adopt the OECD model reporting rules for digital platforms (Model Rules), platforms such as AirBnB now have a requirement to collect information regarding sellers operating on their platforms. Why? To help tax authorities identify sellers that are not reporting all of their income. 

Post Brexit, the proportion of UK individuals owning holiday lets in the EU fell due to the difficulty in purchasing a property abroad and the complicated paperwork which accompanies an EU holiday let. We wonder whether this could fall even further, following the adoption of the Model Rules and equivalent rules by various jurisdictions. 

The Model Rules outline that platforms facilitating the rental of immovable property will need to collect, verify and report both identification and sales information regarding sellers operating on their platform. Sellers can be individuals or entities. The EU implemented these rules under the name of DAC7 from 1 January 2023, and the UK will be implementing these rules from 1 January 2024 under the ‘Platform Operators (Due Diligence and Reporting Requirements) Regulations’. 

Sellers that rent the same immovable property listing through the platform more than 2,000 times during the reportable period, are specifically excluded from the rules as they are not deemed to be ‘high risk’ for compliance purposes. A favourably received exclusion for large providers of hotel and similar accommodation. 

As the Model Rules promote international co-operation, tax administrations will get access to information on income earned by owners of properties within their jurisdiction, even where the owner resides elsewhere. Those UK sellers with EU holidays lets could expect a knock on the door from overseas tax authorities if tax is not being declared locally. 

With different tax rules across the EU, this is likely to create further complications for sellers which have properties in a number of EU countries. In addition, where sellers haven’t been reporting their income in the EU country but should have been, penalties may be applied for under-declared tax. 

With the reports due for EU businesses in the coming months, we encourage UK sellers to act now and consider their overseas tax position. 

Sarah Goodwin
Manager, VAT Planning & Advice
AUTHOR
Sarah Goodwin
Manager, VAT Planning & Advice
AUTHOR