An Italian judge has taken the extraordinary step of ordering the seizure of €779.5 million (approximately $835.5 million) from short-term rental giant Airbnb due to allegations of tax evasion. Prosecutors claim that Airbnb failed to collect a tax from landlords on roughly €3.7 billion in rental income. Under Italian law, landlords are obliged to pay a 21% tax on their earnings.
Airbnb, when questioned by the BBC, expressed its surprise and disappointment regarding the actions announced by the Italian public prosecutor. Christopher Nutly, a spokesperson for Airbnb, mentioned that the firm’s European headquarters had been collaborating with the Italian tax agency since June in an attempt to address the issue. Nutly also stated, “We are confident that we have acted in full compliance with the law and intend to exercise our rights concerning this matter.”
Prosecutors in Milan revealed that three individuals who held managerial positions at Airbnb from 2017 to 2021 were also subjects of investigation.
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 this taxation rule in Italy violated the European Union’s principle of freedom to provide services across the 27-country bloc. However, the EU’s highest court later ruled in favor of Italy’s requirements.
In recent years, Italian authorities have intensified their scrutiny of the tax practices of major corporations, including Airbnb, which has been operating in Italy since 2008. Italian prosecutors have initiated tax-related investigations against other major tech companies like Netflix and Meta, according to media reports.
Last month, Italian politicians announced their intentions to clamp down on landlords who fail to pay taxes on short-term rentals through platforms like Airbnb. The co-ruling Forza Italia party disclosed that Italy is planning to introduce a national identification code for short-term rentals.
Forza Italia leader and Deputy Prime Minister Antonio Tajani explained that this code will help identify the revenue of individuals renting flats without declaring their income. Politicians estimate that this move could potentially increase Italy’s fiscal revenue by €1 billion.