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Tax evasion… by prepaid

Categories : Cash is a public good, Cash is trust
December 13, 2017
Published in : Card payments, France, Fraud, Tax evasion, US
The French Ministry of Finance put an end to a legal loophole whereby hosts could avoid declaring their Airbnb rental revenues thanks to a prepaid card issued in Gibraltar.
Communication Team

Thanks to a judicial loophole, homeowners of rentals posted on Airbnb France were able to avoid declaring their revenues to the French tax authority for the past three years. This was unveiled by France Info – the French news service – at the beginning of the year. Indeed, the American online rental company offered landlords the option to use a prepaid card – issued by a partnering company Payoneer in Gibraltar – to deposit their rental revenues. The card could then be used like any debit card.

The Ministry of Finance convened Airbnb and, on December 11th, the company announced that it would stop issuing the card in France and cancel those already in use.  Despite the data exchange agreement between France and Gibraltar, the use of the prepaid card allows users to evade taxes thanks to a legal loophole. In fact, Payoneer is registered as an “electronic money” institution, and is therefore exempt from the data exchange law.

Airbnb assures that 90% of transactions are carried out the “normal” way – meaning that payments are directly wired to the host’s bank account – and reminds renters that they must verify and respect local regulations, including fiscal ones, when using the online platform. Airbnb also stated that it “sends a tax reminder to the hosts each year so they know exactly how much income they have to report to the tax authorities”.  

 

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