Airbnb has agreed to settle an ongoing tax dispute in Italy by paying 576 million euros ($621 million). Italian prosecutors had claimed that the vacation rental company owed up to €779 million ($840 million) in short-term rental taxes that were not paid on behalf of hosts using the platform between 2017 and 2021. There were threats from Italian tax authorities to seize these funds.
In a statement released on Wednesday, Airbnb confirmed that it would not seek to recover any of the payment from its hosts. The company also mentioned that it is developing new tools that would allow hosts’ taxes to be automatically withheld by Airbnb and paid directly to the Italian authorities.
The company said;
The vast majority of hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income. We hope the agreement with the Italian Revenue Agency and recent legislative changes in Italy will provide these families with certainty about the rules around hosting for years to come.
Italy represents a significant market for Airbnb, with thousands of hosts leveraging the platform to lease their properties. On average, each host raked in just over €3,500 in the previous year.
Italian prosecutors report that the company amassed approximately €3.7 billion ($3.96 billion) in rental income in Italy from 2017 to 2021, with 21% of this sum being taxable.
Previously, Airbnb had contested in a European Union court that the tax on short-term rentals, implemented in 2017, wasn’t legal under the bloc’s regulations. However, the company lost the case in December of the previous year.
In the past, Italy has managed to recoup taxes from American tech platforms. In 2017, Google agreed to pay €306 million ($327 million) to cover taxes for the years spanning from 2009 to 2015. Additionally, in 2015, Italy negotiated a similar unpaid tax agreement with Apple worth €318 million ($340 million).
The settlement with Airbnb occurs as Prime Minister Giorgia Meloni’s government is aiming to curb widespread tax evasion and increase the tax rate on short-term rentals, such as those supplied by Airbnb, to 26%.
In its statement, Airbnb mentioned that it appreciates the clarity provided by Italy’s 2024 Budget Law on how platforms should deduct income taxes for non-professional hosts in Italy moving forward. It also acknowledged the advancement of national short-term rental guidelines in Italy, including a nationwide registration system.
These improvements will make it easier for historic centers such as Venice and Florence to see who is hosting and how often, and to develop proportionate policy solutions in response. Airbnb is committed to working with Italian authorities to make the rules a success.
