Data Sharing and Tax Enforcement: Evidence from Short-Term Rentals in Denmark

57 Pages Posted: 9 Jan 2023 Last revised: 10 May 2023

See all articles by Marcel Garz

Marcel Garz

Jonkoping University - Jonkoping International Business School (JIBS)

Andrea Schneider

Jonkoping University - Jonkoping International Business School (JIBS)

Date Written: May 9, 2023

Abstract

Airbnb and other home-sharing platforms have been facing increasing regulation over the past years, mainly in the form of restricting short-term rentals through day caps. In contrast, as one of the first countries in the world, Denmark applied a collaborative strategy: In 2018, the government negotiated an agreement with Airbnb about the transmission of income data from the platform to the tax agency. We analyze how this data-sharing agreement affected hosts’ behavior on the platform, using a difference-in-differences approach with Sweden as a counterfactual. We find that the agreement reduced hosts’ propensity to list property on the platform by 14%, while increasing listing prices by 11%. Our results indicate that platform exits were mostly limited to single-property hosts. In contrast, hosts with many properties and those in areas with initially low Airbnb penetration made their rental objects more often available and managed to increase the number of bookings. Overall, the findings imply that the data-sharing agreement not only helped to increase tax compliance but also led to a commercialization and spatial re-organization of short-term renting in Denmark.

Keywords: Airbnb, DAC7, digital platforms, home sharing, income tax, tax enforcement

JEL Classification: H26, L86, M38, R12, R31

Suggested Citation

Garz, Marcel and Schneider, Andrea, Data Sharing and Tax Enforcement: Evidence from Short-Term Rentals in Denmark (May 9, 2023). Available at SSRN: https://ssrn.com/abstract=4319945 or http://dx.doi.org/10.2139/ssrn.4319945

Marcel Garz

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Andrea Schneider (Contact Author)

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

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