No fewer offers, no less competitiveness. The “Airbnb tax” approved by the Norwegian Government years ago seems harmless, considering the platform’s growing prominence in the country. It did not serve to encourage homeowners to transfer their homes to the residential rental market, thus making homes cheaper. It was not noticed in the rates announced on the American website.

At least that’s the case with a recently published study on the subject. Economics Letters. The report is for 2023 but was of particular interest for Spain, where PSOE and Sumar initiated the discussion on the implementation of this law. 21% VAT to tourist rentals.

Spain isn’t the only country to see Airbnb expand its accommodation offerings at a dizzying pace. This phenomenon, which has also occurred in many other countries, including France, Italy and the United States, has led some governments to take action to limit, if not outright expel, market influence.

Norway experience

Another good example comes from Norway, where a debate about the Airbnb boom arose years ago: tax exemption We enjoyed short term rentals. Income from these short-term rentals, designed for tourists and lasting less than 30 days, was not subject to tax.

The platform’s gaining prominence in the country caused discomfort both in hotels and some of the public. The first ones found themselves in a new competition. The latter has seen options for finding affordable housing become more complex.

There is nothing that Spain hasn’t experienced firsthand.

In this environment, the Norwegian Government decided to take action and introduced a new tax on short-term rentals years ago. Nickname: “Airbnb tax.” Essentially, starting in 2018, Norwegian landlords discovered that the money they earned from such rentals designed for tourists had to be taxed. a rate of 22%.

That’s the summary, of course. The small print is a little more complicated.

The government decided to apply the tax only to owners exceeding the annual income threshold (10,000 kroner, approximately 860 euros), and the rate was not extended to 100% of their turnover. This is calculated on 85% of the total value. The website of the Norwegian Tax Administration Skatteetaten details exactly how and when the new tax will be collected, including examples of apartments rented through Airbnb.

What was Norway seeking with this measure? Marcel Garz and Andrea Schneider explain this in an article published in the journal. Economic Letters They analyze this in detail. Basically, returning houses to the housing rental market at more affordable prices. Meanwhile, the public coffers received the new tax.

“Theoretically, why should the ratio be departure of hosts for those for whom the tax burden would make renting unprofitable. Or it may cause price increases because landlords share some of the tax burden with customers. Or both. “At least if homeowners comply with the tax,” they comment.

That was the theory. It turns out the reality is a little different.

After analyzing the market response in detail and comparing it with Sweden, a country with which Norway shares similarities in social, tourism and real estate, Garz and Schneider came to a striking conclusion: “Using individual-level data on the population between 2015 and 2019” “We found no evidence that hosts in Norway are leaving Airbnb or increasing their prices.”

In sum, in their reports, both researchers ignore that the tax has relevant “economic effects.”

“We found no significant impact of the tax on hosts’ propensity to list their properties on Airbnb; point estimates were close to zero. There was also no significant change in the number of properties listed,” they add. On rates they also insist: “Any potential price increases were small at best. with 22%“.

Their calculations show that homeowners earned an average of $5,131 per year in 2018/2018; This means paying hundreds of dollars in taxes a year. Experts say the total is “high enough” that some of these homeowners have concluded that advertising their homes on Airbnb is no longer profitable for them. Or at least this cost was reflected in the final prices and ended up in the customers’ pockets.

None of this happened. Garz and Schneider point to an important factor that helps explain this apparent lack of results: how the measure was implemented. In their article they talk about “poor implementation of taxes” and insist that taxes should be expanded “effective tax designs”.

“These results support the assumption that the tax is not adequately implemented, as it depends on taxpayers declaring their rental income.” In fact, Norway is already exploring other ways to target the industry, such as creating a tourism tax.

Norway isn’t the only country moving to mitigate the effects of Airbnb’s expansion. Ten years ago, Amsterdam agreed with the platform that it would be responsible for collecting tourist tax from its customers; New York imposed strict restrictions, leaving another example of a control measure failing; proposal moved to New Jersey; Barcelona wants to say goodbye to outright temporary rentals and they have started to update their regulations to strengthen the regulation of holiday rentals in France.

But the example in Scandinavia is particularly interesting in Spain, where discussion has begun on imposing a 21% VAT on tourist apartments, a measure agreed by PSOE and Sumar during negotiations for next year’s fiscal package.

The industry has already shown concern about the measure, but if the Norwegian example shows anything, it is that its effects may not be as expected. At least, as Garz and Schneider point out, they have a good strategy.

Pictures | Darya Tryfanava (Unsplash) and Samuel Han (Unsplash)

in Xataka | “Honestly, I wouldn’t come here”: Oslo markets itself as a boring tourist destination, and it makes sense