Hey Everyone, Just got on for the first time. I'm in a g...
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Hey Everyone, Just got on for the first time. I'm in a group of airbnb folks and there was a discussion this week about t...
Latest reply
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Hi there,
I am an airbnb host in Ireland and I heard it's possible to declare Airbnb incomes through a company and pay a company tax rate of 12.5% instead of personal income rate of 52%. Is that possible and if so, has any host here any idea how to go about it?
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Disclaimer: I know nothing about revenue law in Ireland, I'm just assuming it's a similar system to most western jurisdictions.
This may be possible, i.e. by establishing a company and leasing your listing to it and therefore revenue is paid to the company and any profits are taxed at the corporate tax rate. However this would only benefit you if you're willing and legally able to leave the profits within the company as retained earnings to be streamed to you as tax paid dividends at some time in the future when your marginal tax rate is low. If you wanted to gain access to the profits as they accrue you'll either have to pay them to yourself as a salary or receive them as dividends, both of which are taxed as ordinary personal income.
There's also the issues that (1) setting up a structure for the sole purpose of minimising tax can, in some jurisdictions, be defined as a 'scheme' and will attract penalties and (2) you'll have the additional cost of establishing the company and the ongoing costs of paying yearly registration fees and preparing a company tax return. Generally, company tax returns, unlike personal tax returns, must be prepared by a registered tax agent.
Disclaimer: I know nothing about revenue law in Ireland, I'm just assuming it's a similar system to most western jurisdictions.
This may be possible, i.e. by establishing a company and leasing your listing to it and therefore revenue is paid to the company and any profits are taxed at the corporate tax rate. However this would only benefit you if you're willing and legally able to leave the profits within the company as retained earnings to be streamed to you as tax paid dividends at some time in the future when your marginal tax rate is low. If you wanted to gain access to the profits as they accrue you'll either have to pay them to yourself as a salary or receive them as dividends, both of which are taxed as ordinary personal income.
There's also the issues that (1) setting up a structure for the sole purpose of minimising tax can, in some jurisdictions, be defined as a 'scheme' and will attract penalties and (2) you'll have the additional cost of establishing the company and the ongoing costs of paying yearly registration fees and preparing a company tax return. Generally, company tax returns, unlike personal tax returns, must be prepared by a registered tax agent.
Thanks Louise that's something I never thought of. Maybe we should just keep it simple and pay the 52% even though its painful 😞
I did and they suggested not to go down this road of setting up a company either as it's not a tax efficient option.