Airbnb to pay €567 million to settle Italian tax probe

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Airbnb will pay €576 million to settle a dispute with Italian tax authorities spanning the period between 2017 and 2021, the online rental platform said on Wednesday.

The Italian authorities had ordered the seizure of €779 million from Airbnb in November as part of an investigation into tax evasion, accusing the platform of failing to collect a 21% tax on rental income received by owners from 2017 to 2021.

“We are not seeking to recover any of this sum from our Hosts. We are continuing our constructive engagement with the Italian authorities for 2022 and 2023. Italy is an important market for Airbnb,” the company said in a press release.

According to Airbnb, “thousands of owners” are present on the platform in Italy, with an average annual income of around €3,500 in 2022.

“The vast majority of Hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income” which helps “nearly two-thirds” of these people “make ends meet”, the statement said.

At the end of October, the Italian government stated its intention to step up the fight against tax-evading short-term rentals and to increase taxation on owners who offer more than one flat on platforms such as Airbnb.

An amendment to the draft 2024 budget provides for the creation of a “national identification code” associated with tourist accommodation, which will make it possible to track down those who have not been declared to the tax authorities, explained Antonio Tajani, foreign minister and vice-president of Italy’s Council of Ministers, at the time.

“In this way, there will be transparency and the whole system will be regularised”, he argued, adding that this budgetary measure would also “increase State revenue” and help to “reduce the tax burden” on families.

As for the planned increase in the tax rate, “it will only be applied from the second flat rented by each owner, so it won’t be for everyone”, he said.

Owners of short-term rental flats can currently opt for a flat rate of 21%. This rate will rise to 26% for other flats rented for less than 30 days.

The draft budget “in its current form, clarifies how platforms such as Airbnb should withhold income taxes for non-professional Hosts in Italy moving forward,” Airbnb points out in its statement.

“We welcome the clarity offered by this planned update to Italian law and are preparing to comply by introducing new tools for applicable Hosts to have their taxes withheld automatically by Airbnb, and paid to the Italian Revenue Agency on their behalf directly,” the company said.

Short-term rental platforms are regularly accused by hotel professionals of “unfair competition” and of contributing to the rise in rents and the shortage of affordable accommodation for residents of tourist towns.