Italy's Response to Airbnb: Demands Seizure of $800 Million in Unpaid Taxes
Italy to seize $836 million from Airbnb over unpaid taxes as landlords allegedly evade payments, escalating pressure on the platform
Italian tax authorities are prepared to confiscate approximately â¬779 million ($836 million) from Airbnb due to accusations of non-payment of taxes by landlords utilizing the platform. This action highlights the growing scrutiny surrounding short-term rentals, which have experienced substantial growth in major cities throughout Europe and the United States.
The Milan-based public prosecutors office for tax offenses has ordered a seizure that is equal to the amount Airbnb (ABNB) did not pay on behalf of landlords between 2017 and 2021, according to a statement from the prosecutors office on Monday. The company's European arm, based in Ireland, generated approximately â¬3.7 billion ($3.96 billion) in rental income in Italy during that period, of which 21% was supposed to be paid in taxes. It remains unclear whether individual landlords will face charges.
Airbnb contended in a European Union court that the tax imposed on short-term rentals, which was introduced in 2017, contravened the regulations of the bloc. However, the company was unsuccessful in its legal battle and lost the case in December of the previous year. Nevertheless, Airbnb has not yet fulfilled its obligation to pay the outstanding tax amount. On Monday, Italian prosecutor Marcello Viola informed the local press that three individuals who held administrative positions at Airbnb in Italy are additionally being charged with unpaid taxes.
An Airbnb spokesperson stated to CNN on Tuesday that Airbnb Ireland has been engaged in active discussions with the Italian tax agency since June 2023 to resolve this matter. The spokesperson expressed surprise and disappointment regarding the action taken by the Italian public prosecutor on Monday. However, they remain confident that Airbnb has fully complied with the law and intends to exercise their rights regarding this issue.
While Airbnb still has the option to appeal, implementing the ruling will not be straightforward. Similar cases have occurred in the past. For instance, in 2017, Google, which is owned by Alphabet (GOOGL), agreed to pay Italy â¬306 million ($327 million) in taxes for the years 2009 to 2015. Additionally, in 2015, Italy reached a comparable unpaid tax agreement with Apple (AAPL) valued at â¬318 million ($340 million).
With the government of Prime Minister Giorgia Meloni aiming to combat widespread tax evasion and increase the tax rate on short-term rentals, including those offered by Airbnb, from 21% to 26%, the recent ruling has been issued. Not only is the Italian government taking action, but officials in other locations are also tightening regulations on the company. In September, New York City authorities implemented rules that mandate Airbnb landlords to obtain an official registration number for properties listed for stays of less than 30 days, a move that Airbnb has criticized as a de facto ban on short-term rentals in the city.
Italy's Foreign Minister, Antonio Tajani, announced to reporters last week that stricter rental codes would be implemented in order to crack down on individuals who do not report profits from their short-term rentals. Tajani emphasized that this initiative could potentially increase Italy's fiscal revenue by €1 billion ($1.1 billion) annually. Anna Cooban also made contributions to this article.
