DST28000 - Property Marketplaces

There are special rules to determine the UK Digital Services revenues for Online Marketplaces which receive revenues arising in connection with accommodation or land.

The broad effect of these rules is to look at the location of the property rather than the normal location of the user owning the property.

What do the rules apply to?

The rules apply to revenues arising in connection with accommodation or land. Any other revenues continue to be treated under the normal marketplace rules outlined in DST27000.

The rules will apply when revenues arise in connection with the provision of accommodation, so for instance facilitating a holiday let. Revenues from facilitating related services to the provision of such accommodation will also be covered by these rules. This might cover the fee the marketplace receives for providing cleaning services to give one example.

The rules also apply to revenues from facilitating the sale of an estate, interest or right in or over land and again to revenues from related services.

It does not matter whether the accommodation is in fact provided. If a marketplace received revenues from a reservation at a property, which was subsequently aborted, the revenues will still be subject to the property rules.

Case 1

The marketplace transaction rule in Case 1 is modified for property marketplaces. All the revenues continue to be taxable UK Digital Services revenues if the user purchasing the services or property is a UK user.

However, the location of the owner or provider of the land or property is ignored. The location of the land is considered instead.

This means revenues will not be UK Digital Services revenues if a non-UK user purchases overseas accommodation or property even if the owner of that property was a UK user.

Example

A UK user rents accommodation in Tigray from an Avalonian user. The revenues are UK digital services revenues because the user on the demand side is a UK user.

An Avalonian user rents accommodation in Tigray from a UK user. The revenues are not UK digital services revenues because the property is in Tigray. The rules look at the location of the property not the normal location of its owner.

Case 2

Case 2 sets out that revenues arising in connection with particular accommodation or land in the UK are UK digital services revenues.

This applies to both revenues from marketplace transactions and to revenues from listing specific land or properties for sale/rent.

The rule means these types of revenue will always be UK digital services revenue when the land is in the UK.

Example

An Almorian user rents a UK property from an Avalonian user. The revenues will be UK digital services revenues.

An Avalonian user lists a UK property for sale. The revenues will again be UK digital services revenues.

Case 3

The marketplace rule for listings in Case 3 is also modified for property marketplaces. The location of the land is considered instead of the normal location of the user owning the property.

As Case 3 does not consider the user on the demand side, revenues will not be UK digital services revenues when the revenues relate to a listing of an overseas property. This is the case even if a UK user subsequently stays at the property or views the listing.

Example

A UK user lists an Avalonian property on an online marketplace. The revenues are not UK digital services revenues because it is the location of the property, rather than the property’s owner, which is relevant.

This will still be the case if a UK user views the listing and rents/buys the Avalonian property.

Case 4

The property rules only apply to revenues in connection with particular accommodation or land outside the UK. This ensures the rules only apply when the revenues relate to a specific property.

HMRC therefore expects online advertising to still be within the normal rules in Case 4. Revenues will be UK digital services revenues when the advertising is viewed or consumed by a UK user. The location of the property is not relevant.

Case 5

Case 5 revenues are unlikely to relate to particular land or property. This is because revenues relating to particular land or property should fall within either Cases 1 or 3.

The land and property rules therefore have no impact on Case 5 and revenues will continue to be taxable when they arise in connection with a UK user.

Example A

Group A is located outside the UK but owns a property in London which it leases for short term holiday lets through an online lettings marketplace. An Avalonian visits London and rents the property. This will be considered a UK transaction and the revenues arising from the transaction are taxable under the DST.

A UK user visits Avalon and rents a flat for two weeks through a marketplace. The flat is owned by an Avalonian company. As the transaction involves a UK user the revenues arising to the marketplace are taxable under the DST.

A UK company owns a house on Sodor which it lets to an Avalonian holiday maker. This is not a UK transaction and so is not taxable.