Italy to Seize Nearly $800 Million From Airbnb Over Unpaid Taxes

Italy to Seize Nearly $800 Million From Airbnb Over Unpaid Taxes

KEY TAKEAWAYS

  • Italian tax authorities plan to confiscate more than €779 million from Airbnb, claiming the platform failed to pay taxes owed to hosts between 2017 and 2021.
  • This amount corresponds to unpaid taxes on €7 billion in rental income generated by Airbnb's European arm in Italy.
  • The platform has resisted Italy's tax regulations, including a registration system and collecting flat taxes for short-term rentals.

Italian tax authorities plan to confiscate about  €779 million from Airbnb, citing the platform’s alleged negligence in paying taxes owed to hosts who use its services.

The specified amount corresponds to unpaid taxes that Airbnb allegedly failed to pay on behalf of owners from 2017 to 2021.

Airbnb’s European arm, based in Ireland, generated about 3.7 billion euros (in rental revenue within Italy during that period. Of this, 21 per cent was identified as the amount of tax owed. The current information does not clarify whether the individual owners will face any charges concerning this matter.

According to local media, like many European countries, Italy needs help finding between the profitable opportunities presented by Airbnb and the potential disruption that a glut of short-term rentals could cause in local housing markets.

To address this, Italy implemented a registration and licensing system for landlords engaged in short-term rentals, which also forced Airbnb to collect a flat tax. However, Airbnb has actively resisted this provision since its inception.

In 2017, Airbnb raised objections to the law, citing EU regulations that gave it the freedom to conduct business across member states without undue restrictions. While the court gave Airbnb a small victory by overturning the requirement for a full-time tax representative, the Luxembourg-based judicial body consistently sided with individual EU countries, asserting their authority to license, regulate, and tax short-term rentals.

The recent decision to support Italy’s planned tax confiscation is consistent with the ongoing trend observed in the EU. While short-term rentals have proven economically beneficial for some, the EU remains wary of the transformative impact they have had on local rental markets.

In line with this concern, the EU’s Supreme Court upheld the legitimacy of Paris’ authority to impose restrictions on short-term rentals, highlighting the negative effects such an overabundance can have on housing affordability.

At the end of September 2023, Florence, one of the main historical and cultural centres of Italy, began measures to ban new short-term rentals, including listings on platforms such as Airbnb or Vrbo.

In a development revealed in early September, authorities in Florence revealed their intentions to outlaw new holiday rentals, with government officials expected to vote on the proposed legislation. Such a law was expected to enter into force in October.

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