And some comments about infrastructure renewal during Covid-19
Below this rather longish introduction, you will find my translation of an article from the Hamburg Tenants’ Association – yes, we have such things here! Almost all tenants belong to one. The article is about a decision in favor of the tax authorities in Hamburg, against Airbnb, which allows the authorities to get data from the platform relating to the transactions made between the landlord, the customer and Airbnb. It is important to point out that Internet platforms like Airbnb, Uber, Amazon, etc., do not like to pay tax, very seldom do, and because of their successful (up to now) ability to conceal the data which they use to make money flow between themselves and other Internet platforms, they thus also encourage people who use these platforms to avoid paying tax.
OK, I agree with you that tax can be uncomfortable to pay at times. But especially here in Hamburg, I actually see the results of my tax payments in infrastructure renewal, and in social services, which actually make things a bit easier for people who are getting older, like me, and young people who have perhaps not finished school and are somehow still able to be channeled into apprenticeship programs so that they can at least develop a skill that will take them through life. Manual professions like carpentry, plumbing, electrician, etc., are all supported in one way or another through the taxes I pay, because all apprenticeship programs send their apprentices to vocational school as well as give them on-the-job training. An apprenticeship usually lasts about 3 years. Then of course you can become a journeyman and eventually a Master, which takes about 7 years in all. In fact, I recently spoke with an architect who hadn’t had a brilliant high school career, so he served an apprenticeship as a bricklayer. He got through that and then was able, through a city program, to go on to technical college and study architecture. Now when he steps onto a construction site, he can converse with the bricklayers who build the walls and foundations, and not only can he see what is right or wrong, he immediately gets their respect because they can see he knows what he’s talking about. He is one of them.
Covid-19 has screwed up all sorts of things here and everywhere else. Most people are chained to their home screens and can only go out to buy groceries or walk through the park to get some exercise, and all that with masks on. Yet, from the very beginning of the lockdown, in March, here in Hamburg, infrastructure all over the city has been renewed. On almost every main street you travel in the city, road construction, sewer renewal, bike path and street parking construction, water mains renewal, cable being laid for electricity… it has been going on almost non-stop for nine months. And now that an even stronger lockdown has been announced, infrastructure renewal has exploded again. Here is a map from the 6th of January showing all the places where infrastructure renewal is taking place in Hamburg.
I don’t drive a car, so I don’t have to worry about traffic. But at the moment people are stuck at home, mostly, so traffic is reduced anyway. You can see the few hotspots on the map. Think about how quickly the city government jumped at the opportunity to get basic services into shape! That’s why I’m so impressed. Sure, politicians are not always the role models we want, and often they are quite nasty people underneath the broad smile presented on TV. But hey, as long as I can see where my tax money is going, I’m not going to complain too loudly about traffic or loud young men smoking during break in front of the vocational school down the block from where I live.
One of the side-benefits of this non-stop work on streets and bridges and sewers is course for the construction workers on these projects. I think that if you are any kind of a manual worker, the city needs you now and you can get a job. Many of the workers are not German. Today, as I went past a truck that had a crane on it that was supporting a huge wooden reel/spool for laying electrical cables, I saw a blind man being assisted past the truck by one of the workers. The worker spoke German with a strong Latin-American accent. He helped the blind man safely across the street and to the bus stop. Then went back to work.
You can’t do infrastructure from home while sitting in front of a screen. Working in the fresh, cold, wintery air – with masks – isn’t as dangerous for workers as sitting at home doing nothing and having no income. After all, schools are closed, shops are closed, cafes are closed. Redoing infrastructure is a great idea.
Now that I’ve had my say about that, let me get to the point about these privateer Internet platforms: My personal opinion – that many people I know agree with – is that the companies that run these platforms need to pay taxes in the countries where the transactions take place, e.g., Germany or France or Italy, and, if possible the companies should be broken into pieces with their parts being subject to the laws of the country where they actually do the business. For instance, if Airbnb in the EU was to be broken into 27 pieces, with each piece registered in a particular EU country, then the company would be subject to the local tax system. Transaction profits could still be made, but each year the platform company would have to file a transparent tax statement in the country in which it works. All the internet platforms, Google, Facebook, Amazon, Apple, etc., should be in the same boat.
Looks like the EU, now that we are finally rid of foot-draggers Britain, might just be able to undermine the tax-free pillars the giants have used to build their castles. It’s something to fight for over here. And over there, in the new but same old America, you might be able to do to your Internet privateers – through clever city, county and state tax systems – what the EU has done to Airbnb.
Another legal setback for Airbnb
The accommodation broker must transmit tax data to German authorities
(vs) Dishonest landlords of vacation rentals will be facing prosecution in the future. Anyone who fails to pay tax on income from private rentals via Internet portals such as Airbnb must expect to be tracked down by the tax authorities. This is made possible by the final ruling of an Irish court. “In cooperation with the Hamburg tax authorities, the Federal Central Tax Authority, various other German states and the tax authorities of the country in which the portal is based, an Internet platform has been obliged, as part of a so-called international group request from the Hamburg tax investigation office, to hand over to the German tax authorities the required tax-relevant data for numerous German landlords who have rented out their living space via this Internet platform,” the Hamburg tax authorities recently announced.
Behind this dry announcement lies a small sensation. Because, thanks to this international judge’s ruling, companies such as market leader Airbnb will be forced for the first time to pass on data from rentals to German tax investigators. “It’s another legal setback for Airbnb, which makes the business model of renting out vacation apartments less attractive in Hamburg, too,” says Tenants’ Association Chairman Siegmund Chychla, welcoming the ruling, which has a signal effect: “First, the group had to put up with the obligation to register providers. Then the European Court of Justice ruled that short-term rentals via Airbnb can be restricted throughout Europe. And now the providers’ data will be disclosed to the tax authorities as contractual partners of the group.”
Hamburg’s Finance Senator Andreas Dressel also rejoiced: “This is a great success for the Hamburg tax investigation department. Nationwide, this is the first successful international group request in connection with rental turnover via Internet platforms. Thus, an important breakthrough has been achieved in clearing up this considerable dark field.” The data now received would help, Dressel said, to track down income previously concealed from the tax authorities in order to subject it to taxation.
The tenants’ association demands that the city now exhaust all legal possibilities – not only to collect lost taxes, but also to stop the undisclosed, and thus disorderly subletting, with sanctions. “Now Hamburg can also use the data records to estimate how high the number of unreported cases is of vacation rental providers who have not registered,” says tenants’ association Chairman Chychla.
MIETERVEREIN ZU HAMBURG
Mieter Journal 4/2020 – Page 27
Danny Antonelli lives in Hamburg, Germany