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An Italian judge has issued an order to seize $835.5 million from the short-term rental giant Airbnb on the grounds of alleged tax evasion. This move comes as prosecutors claim that Airbnb failed to collect a 21 per cent tax on roughly €3.7 billion of rental income, which landlords in Italy are obligated to pay.
Airbnb expressed its surprise and disappointment regarding the Italian public prosecutor’s actions. BBC quoted Christopher Nutly, an Airbnb spokesperson, who highlighted that the company’s European headquarters have been actively engaged with the Italian tax agency to resolve the matter since June. Nutly also stated, ‘We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.’
In addition to Airbnb as a corporate entity, three individuals who held managerial positions at Airbnb from 2017 to 2021 are under investigation, as revealed by Milan Tribunal prosecutors.
Notably, in 2022, Airbnb challenged an Italian law that required the company and other short-term rental providers to withhold 21% of rental income from landlords and remit it to tax authorities. Airbnb argued that these requirements violated the European Union’s principle of freedom to provide services across its 27 member countries. However, the EU’s highest court ultimately ruled in favor of Italy’s taxation requirements.
In recent years, Italian authorities have intensified their scrutiny of the tax practices of major companies operating within the country, including Airbnb. Netflix and Meta have also faced tax-related inquiries, according to media reports.
Highlighting their commitment to addressing this issue, Italian politicians have announced plans to crack down on landlords who do not pay taxes on short-term rentals facilitated by platforms like Airbnb. The co-ruling Forza Italia party is spearheading efforts to introduce a national identification code for short-term rentals, which, they estimate, could potentially boost Italy’s fiscal revenue by €1 billion.
The Italian legal system’s decision to seize $835.5 million from Airbnb raises concerns about the company’s tax practices in the country. Airbnb, which has been operating in Italy since 2008, disputes the allegations and insists it has been working diligently to comply with Italian tax laws. The broader implications of this case extend to other major tech companies, as Italian authorities are also investigating Netflix and Meta for similar tax-related issues.
Furthermore, Italian politicians are taking a proactive stance by planning to implement a national identification code for short-term rentals. This move is seen as a potential solution to address tax evasion by landlords and increase the country’s fiscal revenue significantly. The outcome of this case will likely set a precedent for how tech companies navigate taxation regulations across the European Union.
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