Taxman's pro tips: Reporting Airbnb income to the tax authority in Finland
The Finnish tax office reminds that even short term rental income is taxable.When you rent your apartment through Airbnb, you should report the income in your tax statement.
The authorities have tracked the tax accumulation of income from short term renting. The results show that a third of all Finnish Airbnb hosts did not report the income appropriately.
In 2015-16 the tax officials identified over 6,000 individuals who received income from Airbnb. Around 1,900 of these did not pay their dues to the taxman. In total that amounted for a total 8,5 Million in untaxed income. Rent is taxed as capital income, with 30% until 30,000 and 34% beyond that. This means that the state lost over three million due to tax evasion.
In a bulletin outlining taxation of short term apartment renting in Finland, the tax authorities provide five steps to reporting Airbnb income in Finland:
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File your taxes online
The online service allows reporting up to 20 individuals. If the nature of your rental is that you've got weekly changing tenants, then you can set the period to be "a whole year" and for the tenants name enter "Useita vuokralaisia" (multiple tenants)
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Don't send the authorities details of your tenants
Store any documents regarding your renting activities and tenants. You must store the notes for at least five years. The tax authorities will require the details if they wish to do so. The documents should contain the following details:
- Name of the tenant
- Time of rental
- Received income
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You can deduct costs from your income
You cand deduct any direct cost caused by the renting activity. This is for example acquisition cost, such as Airbnb comission. Fixed costs for the duration of the renting period, such as housing company maintenance fee are also deductible.
If you have more thant three tenants in a year, you don't have to report the cost for each individual tenant. The cost can be reported once for each apartment you own and rent.
If you rent only a part of your apartment, the cost should be in proportion to the length of the period and the area rented.
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Even occasional renting can affect tax-free sale of an apartment
If you've lived in an apartment you own for more than two years consecutively, you can sell it tax free. Note that renting the apartment, even for a short period, can have an effect on the terms the sale is taxed.
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Be on time
Avoid backtaxes and other unwanted surprises by reporting taxes on time. The tax authorities monitor income from sources like online platforms, which could promote tax avoidance. Quite often it is not a deliberate act, but rather lack of knowledge. Ask your tax office for more information if you need it.
More information in Finnish in an article on taxation of Airbnb income in Finland.