Data sharing and tax enforcement: Evidence from short-term rentals in Denmark

Marcel Garz and Andrea Schneider

Regional Science and Urban Economics, 2023, vol. 101, issue C

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 (search for similar items in EconPapers)
JEL-codes: H26 L86 M38 R12 R31 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:101:y:2023:i:c:s0166046223000479

DOI: 10.1016/j.regsciurbeco.2023.103912

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