Understanding Tax Liability

Taxes are configured in your property management system (PMS). VacayHome Connect imports your rent and fees - including taxes - during the implementation process, and regularly via automatic sync thereafter. You can opt to have us import taxes from your PMS automatically, or manage taxes manually in the VacayHome Connect client portal. To view or change your tax settings in your VacayHome Connect client portal, go to Settings > Taxes.

When you have a reservation, occupancy tax must be collected and paid to the government tax authority. But, who is liable to collect occupancy tax and remit it to the tax authority? When a guest books on your website, or directly over the phone, you collect and disburse the taxes. But, what happens when a guest books on a third party website that is tax liable in the rental property's region?

It’s becoming increasingly common for tax authorities to consider the listing site (OTA) where the guest booked as liable for the occupancy taxes in some jurisdictions - usually the list of tax liable regions can be found on the OTA's help site. In areas where the legislation is unclear, the listing site may also proactively collect and remit the taxes, to avoid potential liability. This means that in certain jurisdictions the listing site collects and pays the taxes on your behalf, and that taxes will be excluded from your payout. It is also possible that the OTA will collect some, but not all taxes - for example the OTA may pay regional tax, but not local - meaning your payout would include the local tax, and you would still be liable to remit the remaining occupancy taxes to the appropriate tax authority.

As the property manager, your payout from the OTA may be less some or all of the tax collected for a reservation, depending on what the OTA is liable for. This can also mean that you will have to make some changes to the reservation in your property management system in order to balance your accounting.

When the OTA is Tax Liable

So what’s an accountant to do when the OTA pays occupancy taxes?

You will likely need to account for this in your PMS so that the reservation does not appear to be underpaid on accounting reports, and so that your tax reports are correct.

Property managers can handle this in a few different ways, depending on what is possible in your PMS, and what is required by your region's tax authority:

One option is to remove the tax remitted by the OTA from the reservation’s folio or financials. This will correct the reservation total, and remove the tax payout when you process revenue. It will ensure the reservation shows paid in full when you apply the payment from the OTA.
Another option, if it's supported by your PMS, is to add a pre-deducted fee for the amount of the tax, and record the reservation payment in full or as instructed by your property management system's support team.
If your tax authority requires it, you can request proof of tax remittance from an OTA. In most cases, you will be able to get this information from the OTA.
- Contact your local tax authority to verify their requirements.
- If you need assistance requesting proof of remittance from an OTA, reach out to your Client Success Manager (CSM) for help.
  Tip: If you aren’t sure how to contact your CSM, simply submit a Support ticket from this site by clicking the Help button in the bottom right corner or by clicking Submit a request, be sure to provide your contact information and the details of your question, and your CSM will connect with you.