Recently AirBnB started withholding tax, which we believe is an amount for US income tax. The thing is, none of of our listings are in the US. The person who created the AirBnB account for the business who owns or leases the rental listings is a resident of the same non-US country. One AirBnB rep said that in order to avoid US income tax withholding, the company needed to open a business account. Anybody ever hear of that? I spoke with another AirBnB rep later, and they stated there was no such thing as a business account for hosting, only business accounts to find places to rent for their employees, etc.
Hmm, same as me, @Jay18. Are any of the accounts attached to the listing or the hosts US-based? E.g., email accounts, phone numbers, etc? I really have no idea - just brainstorming. How did you know it was for US taxes?
@Isabel203 Actually, I don't know, I am just guessing on that part. Our company does business with some US companies, and we have an ITIN. AirBnB said I should fill out one of the tax forms on their site, although none of them apply. I sent them the form W-8BEN-E (the 'E' being for entities), and have not heard anything else from them. All phone numbers are prefixed with a non-US country code, and the email address is listed in the same non-US country. Normally I wouldn't really care, and we would file a tax return at the end of the year to settle it, but the company is not going to file a US tax return, because it has no presence in the US. Not even sure how the company would do that. We claim income every two months here, and so we are now claiming income that we are not actually receiving.
What does your transaction listing say?
Since it's going through the UK, could it be for VAT? Any occupancy or service taxes in Iceland?
@Isabel203 It just says "Tax Withholding". It started suddenly after I asked AirBnB if they were going to nag us annually for a tax form we were not required to file, since we are 100% in Iceland. They tried to tell me that it was because of something in the US tax rules, laws, whatever, but I do not see how that would apply. I emailed them a copy of my permanent residence card, and even the form W-8BEN-E for the company. It really makes no sense to me. At the suggestion of legal counsel, I changed the payout method to what AirBnB could not possibly misconstrue as related to anything in the US, and they still withheld taxes. So I need to talk with legal counsel again on Tuesday (Monday is a holiday here), and see what he suggests. The initial information I got was that AirBnB is violating Icelandic law, and once the amount they withheld reaches a certain point, criminal charges could be filed against them. We are considering that, because in the eyes of the company, AirBnB is stealing money from its payout for no valid reason.
@Isabel203 I should add that we report VAT every two months here, and AirBnB income is part of that reporting. Even though AirBnB is withholding what appears to be about 30%, we are still reporting 100% income for our accounting. Also, we are fully licensed for our B&B and other listings, so this is not an 'under the table' operation.
AIrbnb just started withholding taxes on Non-US listings. I have no idea why or how or to which IRS account they think they are linking these 'taxes' to.
Non US Listings. Non-US bank accounts.
What is going on here? No warning or explanation is given by Airbnb.
AirBnB has told me absolutely nothing, except that they are acting under a regulation known as 6050W. So I researched that, and replied this to AirBnB:
The rule you referenced, 6050W, which can be found online here: https://www.irs.gov/irb/2010-43_IRB/ar08.html, specifically states, in part "Participating Payee—Foreign Address Exclusion
Section 6050W(d)(1)(B) provides that, except as provided by the Secretary in regulations or other guidance, the term participating payee does not include any person with a foreign address (the “address rule”). The proposed regulations did not exclude persons with foreign addresses from the term participating payee, although the proposed regulations did provide that in many cases a payment settlement entity may rely on a foreign address to avoid reporting. Specifically, the proposed regulations provided that a payment settlement entity that is not a United States (U.S.) payor or U.S. middleman may rely on a foreign address for a participating payee to avoid reporting as long as the payor neither knows nor has reason to know that the payee is a U.S. person. The proposed regulations also provided that a payment settlement entity that is a person described as a U.S. payor or U.S. middleman in §1.6049-5(c)(5) is not required to report payments to payees with a foreign address as long as, prior to payment, the payee has provided the payor with documentation upon which the payor may rely to treat the payment as made to a foreign person in accordance with §1.1441-1(e)(1)(ii)."
It meant nothing, they said I must supply them with tax information. Which I would happily do, except the three forms listed on their website do not apply in our situation. We would be happy to file form W8-BEN-E with them, and have actually sent them that form. They did not acknowledge it, and simply continue to tell us that we must file our tax information with AirBnB. But I am not going to falsify a form to do so.
For the record, if someone has only a phone number in the US, and/or a bank account in the US, I have already found guidance from respected tax specialists that having one or both does not subject one to US taxes or withholding.
I've since filled the owner's Indonesian details and my last payment did not have withholding.
Now, I must get the $2,000 back for that client since there is no way he will be able to get it back from the IRS, since the IRS does not concern itself with Indonesian citizens income.
Which tax form did you use? Is your Indonesian client an individual or company? According to AirBnB, they cannot give the money they deducted back to the user from which it was withheld. Did AirBnB tell you under which US tax ID number they are going to sumbit these funds to the IRS? I assume your client has no such number. If AirBnB is correctly stating they cannot refund these funds, then your client will have to get a taxpayer ID number (TIN), and file some sort of tax return in the US.
On the surface it sounds as if AirBnB is treating everyone they suspect of being linked to the US as being subject to US taxes, even if that is not the case. How you got linked to the US is anyone's guess, and AirBnB is not saying, I'm betting. They gave me some BS story, and I am not buying it.
Does airbnb still withold your tax? I have same situation, non-american list, non-american resident, non-american income, but they start to withold 30% tax from this year october, I filled W8ben form, do you think it will stop them withold tax? Customers cannot help and answer my question. Could you kindly share your experience to me?
Thanks a lot!
@Jay18 Please let me know how your conversation went with legal counsel. I agree, Airbnb has no right. Even in their official language, they 'may be required', not that they "are required".
"If you received a request to submit your taxpayer information and haven't provided it yet, we may be required to withhold 28% from your payouts and remit the withholdings to the US Internal Revenue Service (IRS). "
And I don't see anywhere in my notifications that I received a request for taxpayer info.
Our legal counsel said that AirBnB had no standing to withhold US taxes. Despite everything we provided to AirBnB, they withheld US taxes, and continue to do so. The three tax forms on their site do not apply in our situation, since the listings are either owned or managed by a company. We are going to have to contact the IRS and get their input before proceeding further, as we see no other choice. AirBnB has all the money, and they are withholding it. If it turns out that AirBnB is wrong, then we will take legal action against them. In Iceland, what AirBnB did is considered theft, and criminal charges can be filed.