Noonan rejected UK-style tax breaks for online giants

Airbnb, Über and other online businesses lobbied Michael Noonan, the finance minister, last month to introduce a tax credit for internet trading.

More than a dozen Irish firms made a joint pitch to Noonan, under the collective banner of ShareIreland, for a tax credit — of at least €2,000 — for money earned online in the so-called “sharing economy”.

George Osborne, Britain’s former chancellor, introduced a “tax break for the digital age” in his final budget last March to allow people who sell goods or services online to earn up to £2,000 (€2,247) without paying tax.

The ShareIreland group argued for a British-style tax credit for people earning small amounts of money online via apps such as Airbnb, the accommodation website with a European HQ in Dublin, and Über, the online “taxi” business based in Limerick.

They joined forces with 11 smaller, mostly Irish companies including rentymydress, GoCar and Dogpatch Labs. They are registering as a not-for-profit industry association to be known as Sharing Economy Ireland, a spokesman said.

“A tax credit like the UK’s was sought by a number of bodies in pre-budget submissions,” the finance department said. “Due to the limited fiscal space available it was not possible to consider it for 2017.”

In a pre-budget submission last year, Airbnb told Noonan it generated €66.2m for the Irish economy, and €123.6m of induced expenditure from jobs supported by the Airbnb community, in the year ending July 31, 2015.

Lobbying on its own behalf, the company argued for rent-a-room relief to be extended to Airbnb hosts. “Such a move would signal Ireland’s ambition to be the home of choice for the next wave of innovative internet platforms, who are transforming the delivery of goods and services by facilitating the use of existing idle capacity in the economy — thus embracing the globally emerging ‘collaborative’ or ‘sharing’ economy,” said Airbnb.

“Attracting these new platforms to Ireland is already a key part of the IDA’s 2015-19 strategy.”

Noonan did not accede to Airbnb’s request but in this month’s budget increased the rent-a-room relief to €14,000 a year from January next.

The department said that the tax break was intended “to incentivise homeowners to provide medium- to long-term accommodation to renters in the market”, and not for short-term lettings.

Airbnb disputes this ruling and claims to have legal opinion to support its case.