How Uber and Airbnb can be tolrerated?

[Marsh04]

Any local business which employs a person needs to pay around 25-30% money in pension fund etc on top of the salary paid to that person. Then the business also pays taxes on its all incomes/profits.

Now uber/airbnb don't pay any of the above mentioned expenses and that is why they have a lot lesser costs than a local business, how come it is considered a fair competition? if it is fair than local businesses should also be allowed to offer people work while opting out of pension contributions/health insurance/unemployment insurance payments.

Any thougts?

P.S: I can see all the time 1-2 Uber taxis available in Helsinki. I think French have taken a step in the right direction.

[betelgeuse]

Any local business which employs a person needs to pay around 25-30% money in pension fund etc on top of the salary paid to that person. Then the business also pays taxes on its all incomes/profits.

Now uber/airbnb don't pay any of the above mentioned expenses and that is why they have a lot lesser costs than a local business, how come it is considered a fair competition? if it is fair than local businesses should also be allowed to offer people work while opting out of pension contributions/health insurance/unemployment insurance payments.

Any thougts?

P.S: I can see all the time 1-2 Uber taxis available in Helsinki. I think French have taken a step in the right direction.

You need a license to drive taxis in Helsinki. You could only legally operate in Uber if you are an existing taxi (=and pay taxes accordingly). Neither is Airbnb tax free. They charge VAT on their won service and the landlord needs to pay capital income taxes (and maybe VAT if they are considered to provide "majoituspalvelu"):

https://www.airbnb.com/support/article/436

Basically your knowledge about taxation in Finland is lacking.

[Marsh04]

That's good if only licenced taxis are aloowed to operate but again they don't use their taxi metres for uber rides but Uber online metres. So Uber doesn't pay any pnesion or other contribution on that income. That's why they can offer cheaper services.

It's not about taxes of the worker it's more about the earning of the employer.

And yes, i am not an expert in taxation.

[Rip]

I have understood Uber is close to non-existent here. I also don't see how could be legal considering how the taxi profession is otherwise regulated. With Airbnb I don't see any fundamental problem with existing regulations, though it seems even the tax office hasn't quite figured out which rules it should apply ( viewtopic.php?f=21&t=89650#p547644 )

[Marsh04]

Just saw this.

http://yle.fi/uutiset/taxi_association_ ... on/8136338

I guess people who are complaining should be a little more informed about taxation than "betelgeuse"

[Upphew]

Just saw this.

http://yle.fi/uutiset/taxi_association_ ... on/8136338

I guess people who are complaining should be a little more informed about taxation than "betelgeuse"

What incorrect info betelgeuse gave?

[Marsh04]

That uber drivers can only work if taxes are paid properly .

The article clearly says that there are taxation issues

[betelgeuse]

That's good if only licenced taxis are aloowed to operate but again they don't use their taxi metres for uber rides but Uber online metres.

The problem with the Finnish license model is that the number of licenses is capped making the market an oligopoly. I don't know the regulations for what meters are acceptable.

So Uber doesn't pay any pnesion or other contribution on that income. That's why they can offer cheaper services.

It's not about taxes of the worker it's more about the earning of the employer.

Uber wants to classify the drivers as entrepreneurs and they just provide a market place. Under this model it's the driver that would be liable for the pension etc payments (here we ignore the other required things like licenses). For example, California is pushing back against this classification:

http://www.reuters.com/article/2015/06/ ... TE20150618

That uber drivers can only work if taxes are paid properly .

The article clearly says that there are taxation issues

That article is about taxi association wanting the police to enforce the laws more strictly to weed out Uber from Finland. The fact that something is illegal doesn't mean people wouldn't do it.

[Querfeldein]

I don't know that much about Uber, but I think Airbnb does not so much compete on tax. If they are able to undercut hotels, it's because most hosts rent out spare rooms, so the cost is much lower than for a hotel. Also, many airbnb hosts effectively do a lot of work "for free", i.e. they provide services to the guests (such as giving advice) that a hotel or b&b would have to pay their employees for - but there is no rule against doing something for free. Also, there are many fewer "back office" staff compared to a hotel; no advertising costs (by hosts; airbnb does some advertising), etc. It's not so much the taxes, but the way the actual business is run that makes airbnb less expensive.

If you book a room with airbnb, VAT is paid for by airbnb only on the processing fee. Paying VAT on the rent is the responsibility of the host, and will depend on the country. As Tummansininen wrote, if you make money from renting with airbnb, you will have to pay tax for it. In some places (e.g. Amsterdam), airbnb will also pay the local tourist tax, just like hotels would.

[riku2]

Now uber/airbnb don't pay any of the above mentioned expenses and that is why they have a lot lesser costs than a local business

I don't know why you're lumping in airbnb with uber, from a customer point of view airbnb is quite different to a hotel. when you book you know there isn't going to be a doorman, room service, cleaning every day. it's totally different to a hotel and the customers know that. A lot of them probably don't care about a doorman, room service, cleaning every day, so why should they have to pay for that. Some hotels already recognize this, you can get a voucher (say 5e/day) for each day you decline room cleaning. So I don't see that hotels can have much of an objection to airbnb. In many countries there are cheap hotels that offer basic but clean rooms - holiday inn express, premier inn, ibis. But they are not that common in Finland since there is still the mentality of hotel = high price to get money from businessmen here.

Neighbours on the other hand would probably have something to say if somebody in the block of flats is running a hotel by another name in the block. people coming and going at all hours. making noise. not caring about good relations with the neighbours. I would hate it from that point of view and some cities already try to limit the short term rental of accommodation.

[Marsh04]

Now uber/airbnb don't pay any of the above mentioned expenses and that is why they have a lot lesser costs than a local business

I don't know why you're lumping in airbnb with uber,

That was a mistake on my part, I'm more concerned about uber than airbnb. I believe uber is based on American values of exploiting poor/desperate people to make richer people super rich, no care or protection for workers. They are also harmful for countries where their slave drivers work as they don't pay a single cent of tax in those on their billions of dollars of profits .

[Querfeldein]

I don't know that much about Uber, but I think Airbnb does not so much compete on tax.

Actually... well I assume most individuals have a tax rate somewhere between 20 and 30%. Which applies to their AirBnB earnings too. Hotels pay 10% VAT. But the difference is the hotels can also make cost deductions on pretty much everything. I think overall, hotels pay far less tax

Airbnb hosts pay income tax. The hotel group may pay a lower tax rate on their profits (corporation tax), but of course, the hotel employees also pay income tax on their salary they receive for the service they provide to the guest. The question here is, for every €100 spent by a guest with airbnb or with a hotel, how much ends up in the state coffers? I suspect that it'll still be slightly higher for a hotel, but perhaps not by much (depends on the tax rate of the airbnb host, and also on the wage distribution of hotel employees, where presumably a large fraction is on low wages, and hence low tax rates).

[Rosamunda]

Good point. Have you done the numbers? As you say, it depends on the tax rate of the host.

I certainly think the government could do more to encourage private householders to rent out rooms to students to solve the student housing crisis. One idea would be to form a cooperative, another would be to create a system whereby home owners rent out rooms to HOAS who then sublets to students. Maybe that exists already.

[Pursuivant]

Not being racist, but the only uber drivers I know of in Helsinki are foreigners. The "finns" have this thing sbout "obey the rules" the foreigners dont have that handicap

[sinikala]

Finland absolutely hasn't got the memo. There seems to be almost nothing on offer between the all-services 200e per night and the crappy dorm room with shared showers. And considering the AirBnB numbers are still very low, even ordinary people haven't noticed the gap in the market.

I have no idea about AirBnB, but am a little puzzled at your suggestion that hotels in Finland are €200 a night.

I must spend 21-28 nights a year in hotels in Helsinki, varying between
- the Holiday Inns in Vantaa, Ruoholahti and the City Centre
- the Crowne Plaza opposite the Oopera
- the Scandics at Simonkenttä and Park (was the Continental)
- used to regularly stay at the Hilton Kalastajatorppa but try to stick to IHG nowadays
- and once or twice at others like the Airport Hilton, the Sokos Flamingo in Vantaa and last weekend at the new IHG Indigo on Boulevard (very nice it was too)

I usually pay €70-€100 a night. Rarely, very rarely, it creeps up to €120 a night. The most expensive would've been a short notice stay at the airport Hilton, when we came back from Milan with flu and needed to crash. That would've been €150 but I paid with HHonors points so it was free.

I have never paid €200 a night not even close. Last weekend's stay in the Indigo came to around €210 for 2 nights for the two of us inc. breakfast.

For the budget traveller in Finland there is the Omena chain, never used it m'self, but I understand it's passable ... and costs €60-80 a night.
http://www.omenahotels.com/

So what gap do you believe there is in the market? <curious>