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Uber (Taxi Company)

It’s official - Uber and Airbnb providers will have to declare income, pay taxes

Finnish residents who provide taxi services via the ride-hailing app Uber or rent out accommodation using the Airbnb network are obligated to declare their income and pay taxes on their earnings. According to new guidelines issued by the Finnish Tax Administration Vero, while the operations may be too small-scale to be considered a business activity, that doesn’t mean they’ll escape the tax net.

Kuvakaappaus Airbnb:n nettisivustosta.
Yli 1000 suomalaista vuokraa asuntojaan ja huoneitaan Airbnb:n välityksellä. Suurin osa asunnoista sijaitsee Helsingissä. Image: Airbnb.com / Yle Uutisgrafiikka

According to the Finnish Tax Administration Vero, income received from the Uber ride-sharing service is taxable earned income. The tax officials said that otherwise the activity is so small-scale that it can’t be considered as business entity for taxation purposes.

On the other hand, income earned by participants in the online accommodation short-term rental service Airbnb can be designated taxable capital income, the administration said.

In a release issued Thursday, Vero ended months of speculation about whether or not income earned from the two relatively new commercial activities should be subjected to taxes.

Vero noted that revenues earned from both activities should be declared to the tax authorities as taxable income. However it noted that individuals were also entitled to deduct the cost of providing these services in their tax declarations.

Uber has ruffled feathers in many countries and not just because of questions over the reliability of its drivers. Other jurisdictions have expressed concerns over the apparent grey area in which the service operates. 

Vero suspects Uber drivers of tax-dodging

The Tax Administration has also previously speculated that Uber drivers might be dodging handing over value-added tax hauls that may have been collected from passengers.

Vero stressed in the guidance issued Thursday that it was not taking any position on the legality of Uber rides. Rather it said that it had based its comments on the assumption that providing Uber services did not require any kind of business licence.  

In August Finnish police urged Uber customers to report the names of drivers to the authorities, saying that the entrepreneurs may not have the required taxi drivers’ licences.

Meanwhile Airbnb appears to have taken off in Finland, with some 1,000 homeowners offering their properties for short-term rentals by the end of 2014.

Officials from the Ministry of Employment and the Economy said that they are keeping a close watch on the developing service. They added that operations were adequately covered by existing laws and did not plan to issue any special guidelines for the sector.