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Apps will now be reporting your earnings to tax authorities
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by Anoop Singh
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Apps like eBay and Airbnb will be reporting your earnings to tax authorities, under a new global agreement which took effect yesterday …
There are a number of apps which allow private citizens to earn money, from selling unwanted items to renting out your home while you’re on vacation.
Whether or not you have to pay tax on this income depends on an often complex set of rules which vary by country. In many countries, you can, in principle, resell items you have bought for personal use without tax liability, but there are often limits on how much you can earn from this before it is classified as trading and becomes taxable.
Similarly, you may be able to rent out your home – or a room – for a certain period, or up to a certain amount, without paying tax, but have to treat it as taxable income beyond those limits.
Many people are either unaware of the potential tax implications of app-generated income, or deliberately fail to report it. To counter both problems, the 38 members of the Organisation for Economic Cooperation and Development (OECD) have signed up to a new agreement under which app owners will automatically share your earnings with tax authorities in your country.
OECD members include the US, UK, many European countries, and others:
Austria, Australia, Belgium, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
BBC News reports on the UK implementation of the rules.
The new rules require digital platforms to report the income sellers are getting through their site routinely. It will apply to sales of goods such as things that have been handcrafted and second hand clothes, but also services including taxi hire, food delivery, freelance work and short-term accommodation lets or even renting out your driveway for parking […]
The government said the new rules would help it “bear down on tax evasion”, as sellers on digital platforms would now be treated more like traditional businesses.
An HMRC [UK equivalent of the IRS] spokesperson said: “These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers.”
1st January 2024 was the date by which apps had to begin collecting the information, though it won’t be handed over to tax bodies until the beginning of next year, once 12 months’ data has been acquired.
Photo: Towfiqu Barbhuiya/Unsplash
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Apps like eBay and Airbnb will be reporting your earnings to tax authorities, under a new global agreement which took effect yesterday … There are a number of apps which allow private citizens to earn money, from selling unwanted items to renting out your home while you’re on vacation. Whether or not you have to…
Apps like eBay and Airbnb will be reporting your earnings to tax authorities, under a new global agreement which took effect yesterday … There are a number of apps which allow private citizens to earn money, from selling unwanted items to renting out your home while you’re on vacation. Whether or not you have to…