We’ve put together this article to help Hosts on Airbnb become familiar with hosting responsibilities, and to provide a general overview of different laws, regulations, and best practices that may affect Hosts. You’re required to follow our guidelines, like our Hosting Standards, and to make sure that you follow the laws and other rules that apply to your specific circumstances and locale.
We recommend that you do your own research, as this article isn’t comprehensive, and doesn’t constitute legal or tax advice. Also, as we don’t update this article in real time, please check each source and make sure that the information provided hasn’t recently changed.
Table of contents
Tax is a complex topic. Your own tax obligations can vary based on your particular circumstances, so we recommend that you research your obligations or consult a tax professional to get more specific information.
In general, the money you earn as a host on Airbnb is considered taxable income, which may be subject to different taxes like rental tax, income tax, or VAT.
The date that tax forms for Iceland are due varies each tax year. Check with the Directorate of Internal Revenue to find out if you need to declare the amount you earn from hosting, which you can find in your host earnings summary. It’s also a good idea to find out if you’re eligible for other credits, like tax reliefs and allowances.
In January 2018, a change to Act No 90/2003, on income tax, took effect, providing that any rental income earned by individuals from the rent of any property, including residential property, is now considered as a business activity, unless one of the following exemptions, provided for in Article 58 a of the Act, apply:
- The rental income comes from the renting of residential property that falls within the scope of the Rent Act No 36/1994 and no more than two separate properties.
- The “rent for rent” exemption is applicable, where an owner of a property earning rental income is legally entitled to deduct rent paid elsewhere from a rental income derived from a property it owns.
- The income is earned from home hosting in a property registered with the District Commissioner, in the maximum amount of ISK 2,000,000 per calendar year.
When rental income falls within any of the exemptions above, it is subject to a capital gains tax. The Directorate of Internal Revenue has more information about capital gains.
Any other activities than listed as exemptions above are considered as business activities (income from independent business activities) and are as such subject to general income tax. Operational costs may be deducted from income in the tax return. The Directorate of Internal Revenue has more information about taxable income.
If a Host’s revenue from accommodation rental exceeds ISK 2,000,000 per calendar year, they’re obligated to charge VAT on lodging to pay to the Treasury. If each rental period doesn’t exceed 30 days, the VAT rate is 11%. Any rental that exceeds one month is exempt from VAT because Act No 57/2007 doesn’t apply to them.
Anyone who offers a service that is subject to VAT needs to notify the Directorate of Internal Revenue about their operations and request registration for VAT within eight days of commencing operations. Furthermore, they must keep records in accordance with the Accounting Act No 145/1994 and submit VAT tax returns to the Directorate of Internal Revenue in accordance with the VAT Act No 50/1988.
Anyone who offers VAT taxable accommodation services shall collect lodging tax from every booking of a lodging unit, which is defined as the rental of lodging for up to 24 hours. Lodging tax forms part of the VAT tax base.
Further information about Icelandic lodging tax is available from the Directorate of Internal Revenue.
Real estate tax
According to Act No 85/2007, home hosting which fulfills the criteria included in the Act is not considered to take place in a commercial property, in the understanding of Act No 4/1995 on Municipalities’ revenue basis. Where accommodation services fall outside the scope of home hosting, they are considered as business activities, conducted in a commercial property. This might (among other consequences) lead to a change in the classification of the property and, as applicable, higher real-estate tax rate.
Real-estate taxes are levied by the municipality where a property is located. We encourage Hosts to look into the applicable rates for your listings for home hosting or accommodation services in your municipality.
Regulations and permissions
It’s important to make sure you’re allowed to host on your property. Some examples of restrictions include contracts, laws, and community rules. Check with a lawyer or local authority to learn more about regulations, restrictions, and obligations specific to your circumstances.
You can use the general info in this article as a starting point around hosting regulations and permissions.
Icelandic hosting regulations
Act No 85/2007 came into effect in the beginning of 2017, which introduced changes to restaurants, guesthouses, and festivities. Part of the changes included a more precise definition of “home hosting” and a clearer distinction between home hosting and other accommodation services.
According to the Act, home hosting is defined as when a registered owner rents any residence they use personally to guests. You can only rent out home hosting rental for up to 90 days per year. The maximum rental period is 30 days. The maximum combined income total you can make from home hosting within a calendar year is ISK 2,000,000. If an individual has two properties listed (examples: a primary residence and a summer cottage), both the maximum rental period and the maximum income limit apply to the aggregated income from both listings together. Listings that have more than five rooms or separate spaces for more than 10 people are outside the scope of home hosting, even if the criteria for home hosting is fulfilled.
Home hosting is not subject to a license, but if you plan to become a Host, you’ll need to notify the District Commissioner of your intentions and obtain a national registration number which can be filled in the section Local Laws on your hosting dashboard. The District Commissioner in the capital area oversees supervision and monitoring of home hosting. They can provide you with information about home hosting, including links to relevant laws and regulations. As part of the registration process, you’ll need to confirm that your property is an approved residential property and that it complies with regulations, including fire safety, health, and hygiene. From the time you register your property, you’ll need to renew it in the beginning of every calendar year. You’ll also need to submit the number of rented days and total income you receive to the District Commissioner when you reach maximum rental period, maximum income limit, or at the end of the calendar year. You won’t be able to renew your registration if you don’t submit this information. When the District Commissioner approves and registers a property, they’ll give you an identification number for it, which you must use whenever you advertise, market, or promote the property, including listings on Airbnb.
Properties that exceed the time or income limit are considered general accommodation services, not home hosting. When legal entities rent residential properties, this would always be considered as general accommodation services. General accommodation services are divided into three categories:
- Accommodation without catering (category II)
- Accommodation with catering, but without service of alcohol (category III)
- Accommodation with catering and service of alcohol (category IV)
According to Act No 85/2007, you’ll need an operating license for these kind of services. You can apply for an operating license at the District Commissioner in the district where the operations will take place. You can learn more about the criteria for license approval and applications from the District Commissioner.
Contractual agreements and permits
Sometimes leases, contracts, building regulations, and community rules have restrictions against subletting or hosting. Review any contracts you’ve signed or contact your landlord, community council, or other authority.
You might be able to add an addendum to your lease or contract that can provide clarity about concerns, responsibilities, and liabilities for all parties.
If your property has a mortgage (or any form of loan), check with the lender to make sure that there aren’t restrictions against subletting or hosting.
Subsidized housing restrictions
Subsidized housing usually has rules that prohibit subletting without permission. Check with your housing authority or housing association if you live in a subsidized housing community and are interested in becoming a Host.
If you share your home with others, consider making a formal agreement with your housemates in order to outline expectations. Housemate agreements can include how often you plan to host, guest etiquette, whether you'll share revenue, and more.
We’ll take appropriate action if anyone notifies us of potential misuse. We have guidelines to help local authorities report housing misuse.
We care about the safety of Hosts and their guests. You can improve your guests’ peace of mind by providing a few simple preparations like emergency instructions and noting any potential hazards.
Emergency contact information
Include a contact list with the following phone numbers:
- Local emergency numbers
- The number for the nearest hospital
- Your contact number
- A number for a backup contact (in case guests can’t reach you)
It’s also a good idea to make sure guests know the best way to contact you in case of an emergency. You can also communicate with guests using messages on Airbnb as a safe alternative.
Keep a first aid kit and tell your guests where it is. Check it regularly so you can restock supplies if they run out.
If you have gas appliances, follow any applicable gas safety regulations and make sure you have a working carbon monoxide detector. Provide a fire extinguisher and remember to maintain it regularly.
Ensure you have a clearly marked fire escape route. Post a map of the route so it’s easy for guests to see.
Here are some ways you can help prevent potential hazards:
- Inspect your home to identify any areas where guests might trip or fall
- Remove the hazards you identify or mark them clearly
- Fix any exposed wires
- Make sure your stairs are safe and have railings
- Remove or lock up any objects that may be dangerous to your guests
Some guests travel with young family members and need to understand if your home is right for them. You can use the Additional notes section of Listing details in your Airbnb account to indicate potential hazards or indicate that your home isn’t suitable for children and infants.
Working appliances, like furnaces and air conditioners, can greatly affect your guests’ comfort during their stay. There are lots of ways you can make sure your guests stay comfortable:
- Make sure your home is properly ventilated
- Provide instructions on how to safely use the heater and air conditioning
- Check that the thermostat is working correctly and make sure that guests know where to find it
- Service the appliances regularly
Establish safe occupancy limits. Your local government may have guidelines.
Part of being a responsible Host is helping your guests understand best practices for interacting with your community. When you communicate local rules and customs with your guests, you’re helping to create a great experience for everyone. We’ve partnered with Promote Iceland’s Icelandic Pledge campaign to encourage responsible travel in Iceland. Check Airbnb Citizen for more info.
If your building has common spaces or shared amenities, let guests know the rules for those places.
You can include your house rules on the Additional notes section of Listing details in your Airbnb account. Guests usually appreciate it when you share your expectations with them upfront.
It’s usually a good idea to let your neighbors know if you’re planning to host. This gives them the chance to let you know if they have any concerns or considerations.
Guests book through Airbnb for lots of reasons, including vacations and celebrations. Let your guests know how noise impacts neighbors early on for a smoother experience.
If you’re concerned about disturbances to your community, there are different ways you can help limit excessive noise:
- Implement a quiet hours policy
- Don’t allow pets
- Indicate that your listing isn’t suitable for children or infants
- Prohibit parties and additional unregistered guests
Communicate any parking rules for your building and neighborhood to your guests. Examples of possible parking rules:
- Only park in an assigned space
- Don’t park on the west side of the street on Tuesdays and Thursdays due to street cleaning
- Street parking is only available from 7pm–7am
First, check your lease or building rules to make sure there isn’t a restriction on pets. If you allow guests to bring pets, they’ll appreciate knowing good places to exercise their pet or where they should dispose of waste. Share a backup plan, like the number of a nearby pet kennel, in case a guest's pet upsets the neighbors.
Always respect your guests' privacy. Our rules on surveillance devices clearly state what we expect from our Hosts, but some locations have additional laws and regulations that you’ll need to be aware of.
If you don't allow smoking, we suggest posting signs to remind guests. If you do allow smoking, be sure to provide ashtrays in designated areas.
Work with your insurance agent or carrier to determine what kind of obligations, limits, and coverage are required for your specific circumstances.
Host damage protection and Host liability insurance
AirCover includes Host damage protection and Host liability insurance, which provide you with basic coverage for listed damages and liabilities. However, these don’t take the place of homeowner's insurance, renter's insurance, or adequate liability coverage. You might need to meet other insurance requirements as well.
We strongly encourage all Hosts to review and understand the terms of their insurance policy coverage. Not all insurance plans will cover damage or loss of property caused by a guest who books your accommodation.
Learn more about AirCover.
Liability and basic coverage
Review your homeowner's or renter's policy with your insurance agent or carrier to make sure your listing has adequate liability coverage and property protection.
Other hosting information
Check out our hosting FAQs to learn more about hosting on Airbnb.
Please note that Airbnb has no control over the conduct of Hosts and disclaims all liability. Failure of Hosts to satisfy their responsibilities may result in suspension of activity or removal from the Airbnb website. Airbnb isn’t responsible for the reliability or correctness of the information contained in any links to third party sites (including any links to legislation and regulations).