South African trusts and payouts

[Nicola3819]

Hi 

we are still struggling. As per SA trust law we need a neutral trustee . Everyone uses their accountant normally.

airBnB now wants the trust need of my Accountanting firm as well as their partners showing their percentage splits.

Is their anyone from AirBnB that understands SOUTH AFRICAN TRUST LAW.

who can I phone locally? I keep getting people from Ireland 

warm regards 

Dave

[Shelley159]

Hi @Nicola3819 

I doubt that a large number of hosts operate an Airbnb inside a trust. Trusts are difficult to begin with (FICA, high taxes, etc.), and the fact that it's not a mainstream way to do business with Airbnb is probably making it even harder for you to tick all of Airbnb's boxes. I'm not sure how your struggles began, but if there's any way that this may be a recurring (annual?) problem between you and Airbnb, it may be good to find an easier solution. Can't you just host in your own name on Airbnb (as a straightforward natural person) and set up a contract (between yourself and the trust) that you will transfer all of the Airbnb income to the trust?

[Nicola3819]

Hi @Shelley159,

Thanks for your response, but I have to say this situation with Airbnb has been incredibly frustrating. While I understand that operating through a trust might not be the most common setup, trusts in South Africa offer significant benefits like asset protection, estate planning advantages, and reduced estate duties. These are exactly why I’ve chosen this structure for my hosting business, and it has worked perfectly fine on Airbnb for over five years—with the same bank account—without a single issue until now.

The fact that Airbnb has been withholding money owed to me for over two months is completely unacceptable, especially since they’ve had no issues with my setup in the past. Suggesting I host in my personal name and transfer income to the trust might seem like a simpler solution, but it defeats the purpose of having the trust manage the property directly and could create unnecessary complications and tax implications.

This is not just an inconvenience; it’s a serious disruption to my income and the trust’s operations. How do I pay my staff?? Airbnb needs to resolve this urgently to prevent further hardship for hosts who use trusts as a legitimate and beneficial structure. I am at my wits end here… desperate is an understatement! And nobody is helping me… it’s just a runaround from one person to the next, and nobody can help me. 

[Shelley159]

@Nicola3819 

As you know, I think it may be simpler to host in your own name. The KYC for an individual is easy. However, there are disadvantages to changing the way you host. Here's my summary, in case it helps a bit.

Hosting in your own name:

You can do this without negative effects on your future operations. Use your own name as host on Airbnb and your personal bank account.  Sign a contract between yourself and the trust to the effect that you rent the property from the trust and you pay the Airbnb revenue to the trust. Declare the full Airbnb revenue to SARS on your personal tax form and deduct it again as paid to the trust. You'll have to be a provisional taxpayer, which you may already be, and create the hosting as a business on your tax form (which will make zero profit as revenue equals expenses).

When you pay over the revenue, the trust receives the same revenue and the accounting, property rights, taxes and estate planning in the trust stay the same as always.

Airbnb says it reports payouts to SARS and to the Reserve Bank - this will tie up with what you declared for personal tax. As long as both you and the trust aren't saving any taxes, there's no tax evasion risk. There's no downside for SARS and you're being open and honest about the nature of transactions - you're simply inserting a natural person between Airbnb and the trust to make it easier for Airbnb to verify where its money goes.

You need to keep VAT in mind as well, but (unless the trust has other VAT activities) it's irrelevant until your earnings are more than R1m per year (which it likely is not? I can't see any listings on your profile, so it's hard for me to judge the scope of your business).

Disadvantages of changing from hosting in a trust to hosting in your own name:

Two disadvantages come to mind:

1) Starting to host in your own name now, will probably only help to avoid the KYC issue going forward. The money earned on past bookings when the trust was the host (which is already due to the trust and unpaid) will likely still have to be paid to the trust by Airbnb🙈!

2) As @Frances3408 noted, you stand to lose the track record (reviews and years on Airbnb) that the trust has built up as a host.

Keep in mind, as @Frances3408 has said, that the profile you used to create this post has no listings linked to it, so we can't see any details of your business.

I agree with you that it should be doable to get Airbnb to keep paying into the trust account as it has in the past. And you may have no choice but to jump through the hoops to collect the money already due to the trust.

Whether you decide to keep hosting in the trust, will probably mostly depend on whether you're willing to go through the process every year. Regulations are getting stricter when it comes to KYC - corporates have to look all the way in until they see the natural persons behind the legal entities. Going forward, filing all the paperwork every year may not get easier with a trust.

[Nicola3819]

Shelley , this is a huge problem affecting tons of guest houses.

in South Africa registering property in trust for tax purposes, capital gains , death duties etc is a very common practice 

read this thread 

https://community.withairbnb.com/t5/Help-with-your-business/Payouts-suspended-as-KYC-for-a-South-Afr...

just one of many, we’ve hosted for 7 years and NOW suddenly we are not getting payments ?

[Rob13038]

We have had the same problem - Luckily our 3rd Trustee is a friend but we were still uncomfortable showing ownership when there is none. AirBnB do not understand. I finally gave in an added the 3rd Trustee and all seemed well but now I see that they same there are issues with the bank account which I have now deleted an re added. We have had paypemts on hold since October

[Paula]

Hello @Nicola3819 👋

Thank you so much for joining our community!

I’m glad to see that Shelley, one of our experienced hosts, has shared her advice. Have you had a chance to read her comment?

Please keep us posted!

[Nicola3819]

@Paula - this isn’t a unique problem. Here’s a thread where countless others are experiencing the same thing!!! https://community.withairbnb.com/t5/Help-with-your-business/Payouts-suspended-as-KYC-for-a-South-Afr...

[Frances3408]

@Nicola3819. Hi Dave, sorry I'm not a SA host but cant you supply the Beneficary Schedule part of your trust deed and any relevant definition sections to show who the actual beneficiaries are? I'd be suprised if its your accountants because that would hardly be "neutral".

[Nicola3819]

Hi @Frances3408 

Thanks for your suggestion. I’ve already supplied Airbnb with the Beneficiary Schedule from the trust deed, more than once, along with the relevant definition sections to clearly outline the beneficiaries. Despite this, they seem to be dragging their feet and refusing to release the payouts owed to me.

To clarify, the beneficiaries are not my accountants—that would indeed be far from “neutral”! The trust is set up correctly, and all documentation provided aligns with Airbnb’s requirements. The issue here seems less about compliance and more about Airbnb’s lack of responsiveness and accountability in resolving the matter.

It’s incredibly frustrating, especially considering this setup has worked without issues for over five years. I really appreciate your input, though, and any further advice is welcome.

[Frances3408]

@Nicola3819 . Dave, yes, I understand your accountants wouldnt be the beneficiaries but clearly Airbnb admin doesnt! I think this is at the heart of the problem, not your paperwork.

@Shelley159 raised some very valid points. Perhaps its easier to set it up under your personal host name, add the specific bank details for the listing owned by the trust and manage the payment splits (if you have multiple listings). I assume you are a principal beneficiary and therefore entitled to authorise yourself to be a host for the listed property? Maybe a letter/trustee minutes to that effect might help?

As you have been running 5 years I assume in any close/ re open listing action you might lose these reviews with a different host name so avoiding this drastic option?

FYI I cant tell much about your listing as you are posting under your Nicola's guest profile.  You should fix this as well.

@Paula can you escalate? This clearly isnt an isolated problem.

[Joan2709]

@Frances3408 

I think @Paula is on leave...🤔 This does seem to be a big problem for many SA Hosts and hopefully one of the other Moderators can escalate this.

It's clear what Airbnb is asking for regarding KYC for SA trusts doesn't fit how SA trusts are legally created and operate. If Airbnb has changed their policies regarding documentation that was previously sufficient, they haven't setup the new requirements correctly so Hosts can provide what is needed. Having AI continuing to require the same information that is used in other countries and/or narrow legal definition simply demonstrates Airbnb is not familliar with the legal aspects for trusts in SA (or other countries). This situation requires a human to resolve, instead of trying to "fit a square peg in a round hole" as the frontline CS is doing. This is especially true as it appears there was no previous issue until this year. Airbnb may be reacting to some KYC legal requirements they need to meet for SA tax purposes, but there is a disconnect somewhere.

I have worked with Estate Planning in the past and there are many trusts created in the US where the trustee is NOT a beneficiary, so I don't get the issue Airbnb seemingly has with that? Sometimes, even a bank is named as a neutral trustee to administer the trust for a minor or incapacitated child. They legally CANNOT have any interest or benefit from the assets of the trust itself. 

Ultimately, these Hosts will just stop Hosting on Airbnb if they can't get paid and turn to other platforms. 

@Rebecca @Bhumika @Alex 

[Frances3408]

@Joan2709 . Joan, great points.

Yes its disappointing that no one from CC admin has picked this up since @Paula post on 5th Dec 2024 or my follow up request of 13th. Next time I'll take your idea and list a few more administrators in the hopes one will respond!

As per @Rob13038 post on 17th Jan Airbnb seems to be assuming that they are dealing with a closely held trust ie what we call here a "family trust" where all trustees and beneficiaries are related.

But trusts come in a variety of structures and what Airbnb should be asking for IMHO is a signed agreement between the trustees and host, giving permission/access etc for the property listing as well as ratifying the bank details provided. It sounds like the payments are being made to the correct entity/owner and therefore flowing to the correct ultimate beneficiaries. 

Its not rocket science but I do know that even here in OZ some institutions struggle to do the KYC for trusts. Clearly AI isnt as smart as humans yet in this regard.

[Emilie]

@Joan2709 @Frances3408 

Hi both, and apologies for the late response -we read every post in the community so we did see this and pass it on as well! 🙂

@Nicola3819 Could you please let us know if this has been resolved for you now?

[Rob13038]

We submitted a beneficiary schedule and they insisted on a Trustee being a Beneficial Owner