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Money Matters and Legal / In Law

New York and Paris Each Move to Regulate Airbnb in Their Own Way

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A common cliché holds that France is a bureaucratic and over-regulated mess for corporations, while America lets them run wild. Comparing city regulations aimed at curtailing short term rentals like Airbnb in Paris, Berlin and New York, the adage does not hold true. 

Since 2010 New York city has attempted to restrict Airbnb’s operations. A state law forbids the renting of a property for less than a month unless the landlord is home. Many flout this law; recently, governor Andrew Cuomo signed a bill stipulating a $7,500 fine for anyone who does not abide. Still, New York still has multi-millionaire Airbnb investors renting out multiple properties for profit.

Berlin has a similar rule. Any landlord renting out more than 50% of their property (which would apply to any apartment being rented out entirely) without a permit faces fines of €100,000. A hefty fine for a city doing its upmost to keep rents low.

Paris has approached the platform with a ‘legalise-and-tax’ policy. Residents can rent out their primary residence for up to 120 days of the year with no particular restrictions beyond usual neighbor and usage considerations. If they rent out more than that, they must register it as a commercial property and will be taxed accordingly. For second homes, the restrictions are more harsh: no short term (less than one year) rentals allowed unless the property is registered as commercial. Registration is both expensive and not a guarantee: in Paris, a petition to adopt commercial status for your apartment can be blocked by building co-owners if there is not already any commercial activity in the building.

France is Airbnb’s second-largest market after the United States. For Paris rentals, Airbnb signed an agreement last summer to collect a Tax de Sejour (overnight tax) on the city’s behalf. Users pay the tax on the platform as an additional charge, with Airbnb passing it on to the Paris authorities. So far it has collected and passed on over 5.5 million euros.

motion was passed on Thursday in the French National Assembly that brought the platform further under regulation. It stipulates that those renting or selling products and services through sharing platforms (like Airbnb) must register with the RSI (an organization for freelancers and entrepreneurs). As auto-entrepreneurs, they will have to pay social contributions if they make a certain amount in the calendar year. The earnings threshold for Airbnb was set at €23,000.

image © iha.com

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