Italy to seize $835m from Airbnb in tax evasion inquiry

Italy to seize $835m from Airbnb in tax evasion inquiry

An Italian court has ordered the seizure of €779.5 million in funds from the popular short-term rental platform, Airbnb, citing allegations of tax evasion.

According to prosecutors, Airbnb neglected to collect taxes from property owners on approximately €3.7 billion in rental earnings. In Italy, landlords are obligated to pay a 21% tax on their rental income.

Airbnb responded to the legal action with surprise and disappointment, with Christopher Nutly, a spokesperson for the company, expressing the firm’s stance. Nutly pointed out that Airbnb’s European headquarters had been actively engaged in resolving the matter with the Italian tax agency since June and asserted their commitment to compliance with the law.

Furthermore, three former Airbnb managers who held positions within the company from 2017 to 2021 have come under scrutiny, according to the Milan Tribunal prosecutors.

In 2022, Airbnb contested the Italian law that mandated short-term rental platforms to withhold 21% of rental income from landlords and remit it to tax authorities. The company argued that Italy’s tax requirements conflicted with the European Union’s principle of allowing services to flow freely across the EU’s 27 member countries. However, the EU’s highest court ultimately ruled in favor of Italy’s tax requirements.

Over recent years, Italian authorities have intensified their efforts to examine the tax practices of prominent corporations operating within the country, including Airbnb, which has been present in Italy since 2008.

Notably, Italian prosecutors have initiated tax-related investigations into other tech giants, such as Netflix and Meta, as reported by various media outlets.

In a bid to combat tax evasion in the short-term rental sector, Italian politicians have announced plans to introduce a national identification code for such rentals. This code is expected to enhance revenue transparency, particularly for those who rent properties without declaring their income. Antonio Tajani, leader of the Forza Italia party and Deputy Prime Minister, emphasized the potential fiscal benefits, estimating that this move could bolster Italy’s revenue by €1 billion.