Has Anyone Experienced Unlawful VAT Charges on Airbnb Service Fees?

[Vita462]

Hi everyone,

I recently discovered that Airbnb is charging VAT on its service fee for my bookings, even though my property is in the Canary Islands, which does not charge VAT as it falls outside the EU VAT zone under Council Directive 2006/112/EC. Instead, the Canaries have their own tax system (IGIC - Impuesto General Indirecto Canario), which replaces VAT. Applying Irish VAT (23%) in this case seems legally incorrect.

I’m a Canary Islands resident but frequently travel abroad. Airbnb claims VAT is applied based on my phone’s location at the time of booking rather than the property's location. This makes no legal sense—taxation should be based on where the service is provided, not where I physically am when receiving a booking.

Despite raising this issue with Airbnb and citing legal grounds, they refuse to acknowledge the mistake or refund the wrongly charged VAT.

Has anyone else encountered this issue? Would love to hear your thoughts and experiences!

Thanks in advance for your help!

[Mike-And-Jane0]

@Vita462 are you talking about the VAT that Airbnb charges on its service fees? If so this is payable as the entity making the booking is based in Ireland.

[Vita462]

This is the response I got from airbnb and I am very confused about their aibnb policies.

Hi Vita,

Thanks for your reply. Based on your account information, it appears that your current country of residence is now Spain.
This will be considerate on the future reservation. Please note that VAT is always charged regarding your location in the time of booking

Any additional question, please let me know.

Best, regards

Airbnb Support

[Vita462]

Airbnb’s application of Irish VAT (23%) on its 15% service fee for bookings in the Canary Islands appears to be legally questionable. As the Canaries are outside the EU VAT system, they operate under IGIC (Impuesto General Indirecto Canario) instead of VAT. Since Airbnb’s service is provided to a host residing in the Canaries for a property located there, Spanish tax laws may require IGIC to apply rather than Irish VAT. Applying VAT based on the host’s phone location instead of the property's location raises serious legal concerns and may not align with EU or Spanish tax regulations.

[Mike-And-Jane0]

@Vita462 as a host living in, and hosting from, the UK we were always charged 20% VAT on Airbnb service fees this being the standard UK rate. I always felt this was appropriate and perhaps Airbnb Ireland has some sort of arrangement with HMRC in the UK to pay Vat at this rate. I really struggle to believe that Airbnb has not thought this through carefully but if you really want an answer then you would need to consult an international tax consultant which will likely cost more than the VAT you are paying!