Airbnb has announced it has decided to pay €576 million to settle the dispute over unpaid taxes in Italy.
Allegedly in violation of a 2017 Italian law, Airbnb failed to remit this sum, totalling €779 million, in short-term rental taxes owed on behalf of hosts utilising the platform between 2017 and 2021, as asserted by Italian prosecutors last month.
During that period, prosecutors claimed that the home-sharing company neglected to gather the required 21 per cent of landlords’ rental income, which amounted to around €3.7 billion.
The company has agreed to settle approximately three-quarters of the outstanding amount owed by thousands of landlords. Given Italy’s significance as a market, particularly with popular tourist destinations like Venice, Florence, and Rome, the firm faces considerable scrutiny from Italian authorities who have initiated investigations into the tax practices of major companies, including Airbnb.
Despite Airbnb’s argument that the Italian tax law violated the European principle of freedom to provide services across the 27-country bloc, the EU Court of Justice has ruled that Airbnb must comply with the law.
Airbnb expressed its appreciation for the clarity brought about by the Italian government’s 2024 Budget Law regarding withholding income taxes for non-professional hosts in Italy. The company also acknowledged the advancements in national short-term rental rules, including developing a national registration system in Italy.
Airbnb stated that these enhancements will facilitate better oversight in historical centres like Venice and Florence, allowing authorities to quickly identify hosts, assess hosting frequency, and formulate appropriate policy solutions in response.
Italy has successfully recovered taxes from well-known United States technology platforms. As a result, in 2017, Google agreed to a $306 million settlement with Italy, covering taxes spanning 2009-2015. Additionally, in 2015, Italy reached a comparable agreement with Apple, settling unpaid taxes for $318 million.
The latest resolution with Airbnb coincides with efforts by Prime Minister Giorgia Meloni’s government to combat widespread tax evasion and raise the tax rate on short-term rentals – like those facilitated by Airbnb – to 26 per cent.
As of the end of September 2023, Florence, a prominent historical and cultural centre in Italy, initiated measures to prohibit new short-term rentals, encompassing listings on platforms like Airbnb or Vrbo.
In a disclosure made in early September, Florence authorities announced their plans to outlaw new holiday rentals, with government officials slated to vote on the proposed legislation. The anticipated law was set to take effect in October.
