Latvia to tighten short-term rental regulations along with other EU countries


Latvia and other EU countries plan to develop short-term accommodation rental regulation to reduce the shadow economy.

Having assessed the possibilities of improving the regulatory framework in the field of tourism with the aim of reducing the risks of illegal provision of tourism services, as well as having familiarised itself with the draft Regulation of the European Parliament on the collection and sharing of data relating to short-term rental accommodation services and the approach of EU Member States in the development of regulation of short-term rental services, the Ministry of Economics has concluded that Latvia should establish a register of short-term rental hostels, while defining the specifics of short-term rental hostels and specific requirements for their operation.

In recent years, the digitalisation of the economy has been very rapid, including the use of online platforms for the sale of goods or the provision of services, including short-term rentals, which are mostly offered through digital online platforms. Short-term rentals in Latvia are offered on various websites and online platforms with/without online booking (e.g. AirBnB.com, Booking.com, Expedia.com, Tripadvisor, etc.). Latvian tourism is characterised by the provision of tourism services in country houses, in resort towns also in residential houses, including apartments.

"As in other EU countries, Latvia needs to regulate the operation of short-term rental accommodation, while at the same time finding the most effective and proportionate model for monitoring this sector in order to promote fair competition in the tourism sector, reduce the risks of illegal provision of tourism services and facilitate the monitoring of tax payments, as well as to ensure full statistical data collection. With the increasing use of digital online platforms, Latvia also needs to develop a system that will allow us to identify the true size of the short-term rental accommodation market and assess overall tourist flows," said Ilze Indriksone, Minister of the Economy.

The Ministry's assessment of the laws and regulations governing tourist accommodation has concluded that a short-term rental accommodation may be classified as a tourist accommodation under the Tourism Act, but is not directly subject to all the same laws and regulations as hotels. Therefore, it would not be appropriate to prohibit the continued use of dwelling houses and apartments for the provision of tourist services, while at the same time clearly defining what additional restrictive conditions or requirements should apply to short-term rental accommodation as a separate sector of the provision of accommodation services.

An assessment of the experience and approach of EU countries in the field of short-stay accommodation reveals that large foreign tourist destinations (cities) have developed and implemented their own regulations. Most destinations (cities) have opted for licensing or registration to allow the start of short-stay accommodation services. They have also introduced enhanced safety and quality standards and are cooperating with platforms to publish information.

At the same time, we would like to inform you that the European Parliament Regulation on the collection and sharing of data relating to short-stay accommodation services and amending Regulation (EU) 2018/1724, which is being developed at EU level with the aim of reducing the risk of illegal tourism services and ensuring the supervision of the short-stay accommodation sector, could be approved later this year. The draft Regulation provides for the obligation for Member States to introduce a register of short-term rental units and landlords, which will facilitate the procedure for identifying the participants in online platforms. The Regulation also allows that the register may be a customised version of an existing database.

The Regulation is therefore designed to reduce unregistered economic activities of natural persons in the real estate rental sector, including the risks of illegal provision of accommodation services, thereby reducing the informal economy in the short-term rental accommodation sector, as well as to ensure the collection of complete statistical data, In order to identify the true size of the short-term rental accommodation market, the Ministry proposes that the implementation of the Regulation should lead to the development of an existing or new data collection tool on short-term rental accommodation and the services provided therein, thereby reducing the risks of the informal economy in short-term rental accommodation services.

Following the approval of the Regulation, the Ministry of Economy, together with the tourism industry and other public authorities, will start work on the development of a framework for the implementation of the Regulation in Latvia, including the establishment of a new register of short-term rental accommodation or the adaptation of existing databases, as well as to define what restrictive conditions or requirements should apply to short-term rental accommodation as a separate sector for the provision of accommodation services.

At the same time, as a step already taken to combat the shadow economy in the short-term rental accommodation sector, the amendments to the Law on Taxes and Duties, which entered into force this year, oblige digital platforms to provide information on the revenues of platform sellers. This enables the National Revenue Service to better track those traders who operate on online platforms, including landlords offering short-term rentals.

The Ministry was tasked by the Government to assess whether the regulatory framework for tourism needs to be improved to mitigate the risks of illegal provision of tourism services, following a fire in 2021 in an apartment at 8 Merkeļa Street, Riga, where a hostel had been arbitrarily set up. On 12 September this year, the Ministry of Economy presented the assessment to the Cabinet of Ministers when examining the information report "On the regulation of tourist hostels and short-term rentals". The detailed information report can be found on the Legislation Portal.



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