Tallinn City Apartments rents 75 apartments in Tallinn Old Town. The company’s reception is overwhelmed as school holidays in Finland mean most of their apartments are occupied.
The owner started with his own apartment ten years ago when he discovered the Airbnb platform. Today, almost all of Tallinn City Apartments’ revenue comes from Airbnb, booking-com and other platforms.
Unlike many other rental housing providers, the company declares its income. With a turnover of around 2 million euros, Tallinn City Apartments paid 50,000 euros in income tax last month.
“It was left to the diligence and conscience of the users. Some don’t pay their taxes out of ignorance, while others do it on purpose,” said Mihkel Randrüüt, owner of Tallinn City Apartments.
Randrüüt welcomes legislation aimed at bringing order to the market because those who do not pay taxes currently enjoy an advantage.
“On the one hand, it will provide a level playing field and take away the competitive advantage for tax evaders. On the other hand, it will make life easier for those who already pay taxes by taking care of some of the bureaucracy “, said Randrüüt.
Taxi and food courier services ombudsman Bolt was not ready to give an interview to “Aktuaalne kaamera” as the company is still in talks with the tax authority. Competitor Wolt says the directive won’t change anything for the company because it has been registering its business with the MTA for more than six years.
The Wolt platform is used by around 2,000 couriers for which the company paid more than €3.5 million in labor taxes last year.
About half of our couriers have an employment contract, which means we pay all their labor taxes. Those who work with an entrepreneur account or through another legal entity are responsible for paying their own taxes, while we report all their sales to the tax office,” said Liis Ristal, Director of Wolt Baltic.
Spokespersons for the Board of Revenue and Customs have said the platforms are a gray area when it comes to taxation. While some platforms, such as Wolt, voluntarily report all transactions, Estonia loses the lion’s share of tax revenue from these companies.
“Statistics suggest it was €13.5m in 2021, and as we know it was €2m less the year before, the trend is up. We We know that around one-fifth of total turnover is reported. In other words, a lot of income goes undeclared and taxes go unpaid,” said Annika Oja, head of personal services at MTA.
Once the law comes into effect, all platforms will be required to report partner income and will be held liable for any failure to pay taxes. The authority urges people who use platforms to earn money to get up to speed on tax matters, as tax liability is universal.