Airbnb rentals in Spain now outnumber hotels

AIRBNB has established itself as a major contender in Spain’s tourism market, much to chagrin of hotels, who warn that the site has an unfair advantage and is costing Spain millions in unpaid taxes.

The online platform – which connects traveling tourists with locals offering a room for rent – has become an increasingly popular and lucrative business. According to a report published by Spanish tourism association Exceltur, listings on Airbnb (or similar sites) now outnumber those offered by traditional hotels. The report listed 2.7 million rental offers on such sites as Airbnb in 2014, versus only 2.4 million in hotels and other official listings.

“The rental offer via online platforms between private individuals is an increasingly professionalised business and has become far more lucrative than traditional home renting,” according to the report.

This puts hotels and other regulated rentals at a disadvantage, as the private rental sector is currently VAT-free, whereas hotels are levied with a 10 per cent tax. Hotels are also held to costly safety and hygiene standards, and are now urging the government to enforce those same standards across the board.

The report warns that the government could be losing millions in tax revenue: up to €432 million per year in undeclared earnings plus €367 million in untaxed VAT.

Reporting earned income and paying taxes is the responsibility of each individual rental proprietor, and Airbnb policy is to remind “all hosts to declare their income and any other applicable taxes.”

The company, founded in 2008, has seen remarkable growth and profit: just in Madrid last year, more than 162,400 guests generated at least €323 million in revenue, supporting private proprietors as well as other businesses in the tourist sector, including shops and bars.

Airbnb officials challenge its critics, saying their business model has a positive economic and social impact. They point out that more than half of their proprietors can’t pay their rent on their monthly salary, and Airbnb offers a solution that keeps a roof over their heads and food on the table.

In response to the tax evasion allegations, Angel Mesado, Airbnb Institutional Relations Representative, asserted that Airbnb pays its taxes corresponding with Spanish law, charging per transaction three per cent commission to the proprietor and between 10 and 12 per cent per to the guest.