Brendan Griffin (Kerry South, Fine Gael)
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264. To ask the Minister for Finance if the rate of tax on earnings from activity such as renting a room on AirBnB will be reduced; and if he will make a statement on the matter. [35981/15]

Brendan Griffin (Kerry South, Fine Gael)
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265. To ask the Minister for Finance if a person must pay tax on earnings from an activity (details supplied); and if he will make a statement on the matter. [35982/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 264 and 265 together.

These questions relate to persons providing accommodation through online accommodation booking sites.

Profits arising from the provision of short-term guest accommodation are taxed in the same manner, irrespective of whether such accommodation is provided through an on-line booking site, whether hosted in Ireland or abroad, or through more traditional forms of service provision.

Where such activity is carried on by an individual, the profit arising from the related income, after deduction of allowable expenses, is chargeable to Income Tax and the Universal Social Charge (USC) at the individual's respective marginal rates, and to PRSI. For the tax year 2015, the rates of Income Tax are 20% and 40% and the rates of USC are 1.5%, 3.5%, 7% and 8%.  The first three rates of USC will fall to 1%, 3% and 5.5%, respectively, from January 2016. The rates at which tax and USC are charged is determined by the level of the individual's income for the year. In the case of individuals who have non-PAYE income that exceeds €100,000 in a year, a USC surcharge of 3% applies to the excess. In relation to PRSI, the general position is that a 4% charge arises on the profit when the income is returned under Revenue's Pay and File system.

Where the activity is carried on by a company, the income is currently charged to corporation tax at 12.5% if the company is carrying on the activity in the course of a trade. Otherwise, the rate of corporation tax for non-trading income is 25%.

The rent-a-room scheme provides an exemption from Income Tax, PRSI and USC in relation to rent received where a person rents out a room or rooms in his or her principal private residence as residential accommodation and the rent received does not exceed €12,000 per year. This scheme was introduced in order to encourage homeowners to rent out spare rooms in their homes, thereby increasing the supply of affordable rental accommodation. It applies solely to the provision of residential accommodation, i.e. where the tenant occupies the room(s) as his/her place of residence, and does not apply to short-term guest accommodation regardless of the whether or not the accommodation is provided via an on-line platform.

I would remind the Deputy that persons offering short-term accommodation via online and offline platforms are competing with traditional B&B and hotel accommodation providers, which are subject to regulation.