Taxman struggles to account for internet earnings

DutchNews, September 6, 2016

King’s Day in Amsterdam: before the
 internet, a rare tax-free moment. Photo:
DutchNews.nl 

The Dutch taxman is struggling to account for people’s earnings in the internet age, reports NOS. 

Traditionally, certain activities have been seen as hobbies and not subject to significant tax. But a freedom of information (WOB) request from NOS reveals that tax experts are looking at whether they are being tough enough about chasing down revenue from bloggers, vloggers and Airbnb renters, for instance. 

A memo from enforcement and intelligence body the EHI reportedly says: ‘At what level of income is an enthusiast who restores and sells bicycles through Martkplaats pursuing a hobby and at what figure is he an entrepreneur? Should the home cook who opens a pop-up restaurant at home four times a year be seen as a restauranteur? What if this isn’t four times but 24 times?’ 

There is a grey area, says NOS, where people making money on a small scale from Airbnb or renting a car via Snappcar can be seen as amateurs and pay little or no tax on this income – but if you are seen to be running a business, this ‘hobby’ notion disappears and you must pay income tax. 

But the increase in popularity of the sharing economy and online platforms like Airbnb mean the tax authorities do not know if people are declaring all of their business income, as they have an obligation to do. It is relatively costly to investigate as small-time business owners pay little tax anyway. 

The fact that transactions happen online mean the authorities have a better chance of monitoring them, says NOS. Amsterdam city council, for example, is already using digital techniques to ‘scrape’ information from Airbnb to check if people are sticking to renting rules of a maximum of four guests at a time and 60 days a year.