France to Close Tax Loophole for Airbnb and Short-Term Rentals

France is taking steps to close a tax loophole and end the more favorable tax treatment short-term furnished rentals such as AirBnB receive compared to long-term rentals.

“We are going to reform the tax rules and I will make proposals. When a windfall gets too big and tax is too favorable, there is no reason to keep such tax treatment that leads to excess,” France’s Finance Minister Bruno Le Maire said in an interview with BFM TV, according to Reuters. 

This move comes after a trio of cross-party lawmakers last month called for rules regulating such rentals to be tightened, as the growing popularity of short-term rentals is often blamed for reducing the supply of housing in many big French cities, which are already facing housing shortages.

The call for tighter regulations in France also comes as nearly 20% of people in Paris who do not already rent their home or part of it on AirBnB plan to do so during next year’s Olympic Games, according to a survey commissioned by AirBnB from pollsters Ifop. 

French tax authorities have clashed with Airbnb before. In 2020, they set a deadline for the company to send them data under a law that compels marketplaces to provide revenue and other company information to the country.

Another French law said that Airbnb must give local governments information about housing, such as the number of guests staying and the names and addresses of the hosts.

More recently, on June 1, Airbnb sued New York City over a new law that it claims amounts to a “de facto ban” on short-term rentals.

The law, known as Local Law 18, is set to go into effect in July and will limit the number of people who can host rentals in the city, which remains one of the company’s most important markets.

Airbnb is challenging the new scheme, calling it an “extreme and oppressive” policy that clashes with a federal law that has shielded many tech platforms from liability for content posted by its users.

The new challenge in France comes at a time when Airbnb is moving to expand into overseas markets.

The firm highlighted its recent pilots in Brazil and Germany as part of this effort during a May 9 earnings call.

“Airbnb is still underpenetrated in many markets around the world, so we’re increasing our focus on these less mature markets,” Airbnb Co-Founder and CEO Brian Chesky said during the call, adding that Brazil and Germany are now “two of our fastest growing markets.”