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“Airbnb” Law in Türkiye and tax / legal consequences
The surge in popularity of short-term housing rental services, encompassing daily and weekly rentals, has been a notable trend in recent years. Comparable to conventional hotel accommodations, these services are esteemed for their practicality and cost-effectiveness. The term "Airbnb," derived from the widely recognized online platform, has become synonymous with this category of rental. The proliferation of establishments offering such services has prompted individuals to explore a new avenue for generating income by renting out their properties.
However, beyond safety and property-related considerations, this trend has given rise to substantial concerns within the realm of tax legislation. Recent tax inspections have brought to light potential tax liabilities for individuals engaging in rentals through platforms like Airbnb. These liabilities encompass Value Added Tax (VAT) assessments, special irregularity penalties, and income tax obligations. Despite the conventional simplicity associated with real estate taxation, platforms like Airbnb have been classified as "commercial organizations," resulting in additional tax responsibilities.
The absence of tax support for properties acquired for economic contribution has sparked apprehension regarding the potentially adverse effects of stringent regulations on innovative investments and technological solutions. This concern persists despite collaborative efforts between the sector and fiscal authorities.
In the given context, the Law on Renting of Residential Properties for Tourism Purposes and Amendments to Certain Laws, as published in the Official Gazette, governs the rental of residential properties for tourism purposes. This law is scheduled to take effect on January 1, 2024, and it excludes rentals for durations exceeding 100 consecutive days.
Under the purview of this legislation, a key focal point is the requirement for lessors to secure a permit from the relevant Ministry prior to entering a rental contract for tourism purposes. Unanimous approval from the owners of individual units within the immovable property where the residential property is situated is also mandated. In instances where the number of independent sections necessitating a permit exceeds five within the same building on behalf of the same lessor, an additional license to open and operate a workplace must be obtained. Furthermore, if the number of independent sections registered in the name of the same person within a building exceeds three, a permit may be issued in the lessor's name for, at most, ¼ of these independent sections.
A notable provision generating debate in terms of implementation is the prerequisite for a unanimous decision by all owners in the building where the independent section subject to the permit is located. However, this requirement is limited to the building housing the property if it is part of a residential complex comprising buildings with multiple independent sections. Notably, this unanimity condition is waived for residences containing more than one independent section where the management plan allows short-term rental activities and where services such as reception, security, and daily cleaning are available.
Additionally, after obtaining the permit, the lessee is obligated to display a plaque at the property entrance with specifications determined by the Ministry. Lessees are prohibited from subletting the property, except for legal entities, which may permit their personnel to use the property rented for tourism purposes. In the event of the lessor's death, if heirs do not apply within three months, or in the case of the termination of a legal entity, the permit becomes invalid, although lessee rights persist until the contract's conclusion.
The authorization certificate may be revoked at the owner's request, upon termination of the tourist rental activity, or under other conditions specified by the relevant law. The legislation also outlines significant administrative fines for permit holders and lessors engaged in unauthorized leasing activities.
As mentioned earlier, this regulation becomes effective on January 1, 2024. Those involved in tourism leasing activities prior to this date must apply to the Ministry for a permit within one month of the law's enactment, i.e., by January 30, 2024. Failure to comply with this obligation will result in administrative fines.
Summary
In summary, the escalating demand, and practices in residential property rentals for tourism underscore the need for regulation and record-keeping. While the regulation is deemed appropriate, certain provisions may create ambiguity in practice, and it is anticipated that the Ministry's forthcoming procedures and principles will provide clarity. Notably, the requirement for unanimous approval from all floor owners, even with exceptions, may lead to significant disputes. The legislator seems to have introduced a somewhat deterrent regulation in this context. It is crucial for lessors currently engaged in tourism rentals to adhere to the specified notification periods and obtain the necessary permission documents, as failure to do so will result in administrative sanctions.
From a taxpayer's perspective, concerns arise about numerous properties remaining vacant for more than 100 days a year or being left unused for extended periods without being influenced by fiscal policies such as taxes. Despite collaboration between sector-leading companies and financial authorities, the absence of taxation guidance on idle properties may impede investor interest and technological innovation. While the government benefits from the industry, stringent regulations faced by large-scale technology companies may inadvertently foster underground structures, highlighting the complexities of regulatory frameworks.
Kind regards,
For tax issues: Saban Kucuk, saban.kucuk@taxia.com.tr
For legal matters: Özlem Kurt, ozlem.kurt@kurtandpartners.com
