Airbnb Settles Tax Dispute with Italy for $621 Million
Airbnb finally resolves tax conflict in Italy, agreeing to a hefty settlement of $621 million (576 million euros) to settle the long-standing dispute over unpaid taxes
Airbnb has reached a settlement with Italian authorities to pay 576 million euros ($621 million) in unpaid taxes. The company had faced a dispute over short-term rental taxes totaling as much as â¬779 million ($840 million) owed between 2017 and 2021. The Italian tax authorities had previously threatened to seize the funds.
In a statement on Wednesday, Airbnb announced that it will not be seeking reimbursement from its hosts. The company is actively developing new tools for hosts to have their taxes automatically withheld and paid directly to the Italian authorities. According to Airbnb, the majority of hosts in Italy are regular families who rely on the platform for additional income. They are hopeful that the recent agreement with the Italian Revenue Agency and legislative adjustments will offer these families assurance regarding hosting regulations in the future.
Italy is a key market for Airbnb, with thousands of property hosts utilizing the platform for rentals. On average, hosts earned approximately â¬3,500 last year. Italian prosecutors reported that between 2017 and 2021, Airbnb generated approximately â¬3.7 billion ($3.96 billion) in rental income in Italy, with 21% allocated for taxes.
Florence's central square, Piazza della Signoria, is often a crush of tourists with few residents around.
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Last year, Airbnb lost a European Union court case where they argued that the tax on short-term rentals, introduced in 2017, was not legal under the bloc's regulations.
Italy has a history of successfully recovering taxes from US tech platforms. In 2017, Google agreed to pay Italy â¬306 million ($327 million) to cover taxes for the years 2009 to 2015. Additionally, in 2015, the country reached a similar unpaid tax deal with Apple worth â¬318 million ($340 million).
The agreement with Airbnb comes as Prime Minister Giorgia Meloni's government works to address widespread tax evasion and increase the tax rate on short-term rentals, including those offered by Airbnb, to 26%. In a statement, Airbnb expressed appreciation for the clarity provided by Italy's 2024 Budget Law regarding income tax withholding for non-professional hosts in the country, as well as advancements in national short-term rental regulations, such as the implementation of a national registration system.
The enhancements will simplify the process of identifying hosts and frequency of hosting in historic centers like Venice and Florence. This will lead to the development of appropriate policy measures. Airbnb is dedicated to collaborating with Italian authorities to ensure the effective implementation of these rules.
