A press release was sent out by the City of Louisville this morning announcing they have reached an agreement with Airbnb to collect and remit the 8.5% hospitality/bed tax on every guest reservation made through Airbnb. Under Airbnb’s current agreement with the state, taxes are added to reservations at checkout and paid by the guest. Airbnb remits to the State on the host’s behalf.
The agreement with the City is expected to go into effect April 1st. Additional details will be made available as they are known. It is advised that everyone continue with current tax collection and remittance practice until further notified. And remember, this applies only to Airbnb reservations. No agreements are in place with other platforms (VRBO, Expedia, etc.) or direct placement guests.
Here is the full release form the City of Louisville:
Louisville Metro and Airbnb announced today the finalization of an agreement that will allow the company to collect and remit taxes on behalf of its hosts in Louisville and Jefferson County. Effective April 1, Airbnb will automatically collect and remit the Louisville Transient Room Tax (8.5%) for taxable bookings. The agreement allows Louisville to fully benefit from people visiting and staying longer through home sharing.
Collecting and remitting hotel taxes can be complicated, as the rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.
That’s why Airbnb has begun partnering with governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts to pay their fair share while contributing new revenue for local governments. These agreements are particularly impactful for a city like Louisville, where some homeowners may only be hosting visitors during a handful of large events such as the Kentucky Derby, and therefore are less likely to be aware of the applicable taxes associated with short-term rentals.
“I am delighted to see that the city has settled on an agreement with Airbnb. We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb Hosts in Louisville – this will put them on the same playing field as our other accommodations in paying the transient room tax,” said Karen Williams, President & CEO of the Louisville Convention Bureau.
“We are always looking for opportunities to better serve taxpayers,” said Louisville Metro Revenue Commission Director Angela Dunn. “This agreement advances that goal by streamlining the local tax process for hosts.”
This marks Airbnb’s third tax agreement in Kentucky. In September 2017, the company announced a statewide tax agreement with the Kentucky Department of Revenue that authorized the company to collect and remit the state sales tax on all Kentucky Airbnb bookings (including in Louisville Metro). And earlier this year, Airbnb and Lexington announced an agreement authorizing Airbnb to collect and remit Lexington’s local room tax.
“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well prior to the Derby,” said Laura Spanjian, policy director for Airbnb. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”
The agreement comes at a time of dynamic home sharing growth in the Greater Louisville area. In 2017, Louisville-area Airbnb hosts earned $10 million in supplemental income while welcoming over 78,000 guest arrivals to the city.