When evaluating opportunities to improve regulatory frameworks in the tourism sector with the goal of minimizing risks of providing illegal tourism services, and after becoming acquainted with the European Parliament's Regulation project regarding data collection and sharing related to short-term accommodation rentals, as well as the approach of EU member states in drafting regulations for short-term rental services, the Ministry of Economics concluded that Latvia should establish a short-term rental accommodation register while simultaneously defining the specifics of short-term rentals and specific requirements for their operation.
In recent years, there has been a rapid digitalization of the economy, including the use of online platforms for selling goods or providing services, including short-term rentals, mostly offered using digital online platforms. Short-term rental transactions in Latvia are available on various websites and online platforms with/without online reservation options (e.g., "AirBnB.com", "Booking.com", "Expedia.com", "Tripadvisor", etc.). Latvian tourism is characterized by providing tourism services in rural homes and, in resort cities, also in residential homes, including apartments.
"Similar to other EU countries, Latvia must also establish regulations for the operation of short-term rental accommodations while finding the most effective and proportional oversight model for this sector to promote fair competition in the tourism industry, reduce the risks of providing illegal tourism services, facilitate tax payment monitoring, and ensure comprehensive data collection. With the expanding operation of online platforms, a system should also be established in Latvia that will allow us to identify the actual scope of the short-term rental market and evaluate total tourist flows," emphasizes Minister of Economics Ilze Indriksone.
In evaluating the regulatory acts governing the activity of tourist accommodations, the ministry concluded that a short-term rental, based on its application type or building type under the Tourism Law, could be classified as a tourist accommodation. However, all the same regulations that apply to hotels do not necessarily apply to it. Therefore, it wouldn't be supportive to prohibit further use of residential houses and apartments for providing tourism services, but at the same time, it's essential to clearly define which additional restrictive conditions or requirements would apply to short-term rentals as a separate sector of accommodation services.
When evaluating the experience and approach of EU countries in the field of short-term rentals, it has been concluded that major foreign tourism destinations (cities) have developed and implemented their own regulations. Most tourism destinations (cities) have chosen to issue licenses or carry out registration to allow the start of providing short-term rental services. Enhanced safety and quality standards have also been introduced, as well as cooperation with platforms in the field of publishing information.
We also inform that by the end of this year, the European Parliament Regulation regarding data collection and sharing related to short-term rental accommodation could be approved, which is being developed at the EU level to reduce the risk of providing illegal tourism services and ensure oversight of the short-term rental service sector. The regulation project proposes an obligation for member states to introduce a register for short-term rental units and lessors, facilitating the identification procedure for online platform participants. The regulation also allows for the possibility of adapting an already functioning database.
Therefore, to reduce the unregistered economic activities of individuals in the real estate rental sector, including the risks of providing illegal accommodation services, thus reducing the shadow economy in the field of short-term rentals, and to ensure comprehensive data collection by identifying the actual scale of the short-term rental market, the ministry proposes that as a result of implementing the regulation, the existing or a new data collection tool related to short-term rentals and the services they provide should be improved, thereby reducing the shadow economy risks in the short-term rental service sector.
After the approval of the regulation, the Ministry of Economics, together with the tourism industry and other state administrative institutions, will start working on developing regulations for its implementation in Latvia, including the establishment of a new short-term rental register or adapting existing databases, and also to define which restrictive conditions or requirements would apply to short-term rentals as a separate sector of accommodation services.
We also remind that as an already implemented step to combat the shadow economy in the field of short-term rentals, this year amendments to the "Law on Taxes and Fees" came into effect, obliging digital platforms to provide information on platform sellers' incomes. Thus, the State Revenue Service can better track those traders who operate on online platforms, including homeowners offering short-term rental services.
The government's task to evaluate whether there is a need to improve the regulatory framework in the tourism sector to reduce the risks of providing illegal tourism services was received by the ministry in connection with the fire in an apartment on Merķeļa Street 8, Riga, in 2021, where a hostel was arbitrarily set up. With the performed evaluation, the Ministry of Economics introduced the Cabinet of Ministers on 12th September this year, considering the informative report "On Tourist Accommodation and Short-term Rental Regulations." You can get acquainted with the informative report in detail on the Legal Acts Portal.
The information was translated using the ChatGPT service.