Critical 'Airbnb' ruling from the Council of State: Ministry of Finance's appeal rejected

A historic judicial decision has been issued that closely concerns property owners who rent out their homes for short periods through Airbnb and similar digital platforms. The Council of State's Tax Litigation Chambers Board (VDDK) has definitively rejected the Ministry of Finance's appeal against a decision that suspended the Revenue Administration's practice of classifying these rentals as "commercial activity" and imposing VAT and accommodation taxes. With this ruling, the path has been cleared for Airbnb earnings to be taxed as "real estate capital income (rental income)" rather than "commercial income."

TAX LANDSCAPE CHANGES COMPLETELY: NO VAT OR ACCOMMODATION TAX!

According to information provided by Ekonomim columnist Abdullah Tolu, the stay-of-execution decision jointly issued by the 3rd and 7th chambers of the Council of State has been upheld by the highest authority, the VDDK, in a decision dated June 29, 2026.

With the decision being issued with substantive justification, the taxation criteria for rentals made via Airbnb have changed as follows:

Previous practice (Ministry of Finance): Short-term rentals were considered commercial activities such as "boarding house/hotel management"; property owners were required to pay Income Tax, Advance Tax, VAT, and Accommodation Tax.

New ruling (Council of State): These transactions will be evaluated solely as ordinary residential rental activity, i.e., real estate capital income. Property owners will only file a rental income tax return once a year and pay income tax; they will not pay VAT, accommodation tax, or advance tax.

WHAT HAPPENS NOW? SUBSTANTIVE CANCELLATION EXPECTED

Although this VDDK decision is a temporary suspension, it has completely determined the substantive course of the case. Legal experts expect the 3rd and 7th chambers of the Council of State to completely cancel the relevant general letter of the Revenue Administration on its merits for the same reasons.

WHAT SHOULD THOSE WHO PAID PENALIZED TAXES OR HAVE ONGOING CASES DO?

This decision opens a legal door for hundreds of thousands of property owners who have faced retroactive Airbnb rental penalties:

1. Those with ongoing cases: Property owners who have been subject to penalized tax assessments and whose litigation process in tax courts has not yet concluded can present this latest decision by the Council of State's VDDK as a precedent to the relevant tax court or appellate court.

2. Those who paid the penalty through settlement: Those who have paid these taxes in the past by reaching a settlement with the Ministry of Finance or by taking advantage of penalty reduction rights can file for correction and complaint, citing the "taxation error" provision in Articles 118 and 124 of the Tax Procedure Law, and request a refund. If they wish, property owners can also wait for the final substantive decision to be issued by the Council of State before making this application.