Italian Judge Orders €779.5 Million Seizure from Airbnb for Tax Evasion

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Landmark ruling highlights ongoing tax challenges for short-term rental platforms in Italy

In a significant development, an Italian judge has ruled in favor of the seizure of €779.5 million ($835.5 million) from short-term rental giant Airbnb, following allegations of tax evasion. Prosecutors claim that Airbnb failed to collect a tax from landlords on approximately €3.7 billion of rental income, as landlords in Italy are obliged to pay a 21% tax on their earnings.

Airbnb has responded to the action, expressing their surprise and disappointment. Christopher Nutly, an Airbnb spokesperson, revealed that the company’s European headquarters had been actively engaged in addressing the matter with the Italian tax agency since June. Mr. Nutly 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.”

Additionally, three individuals who held managerial positions at Airbnb from 2017 to 2021 are currently under investigation, as confirmed by Milan Tribunal prosecutors.

Airbnb had previously challenged the Italian law mandating the withholding of 21% of rental income from landlords and its submission to tax authorities.

An Italian judge has ordered the seizure of 779.5 million euros ($A1.29 billion) from short-term rentals platform Airbnb's European headquarters in Ireland for alleged tax evasion, Milan prosecutors' office says.

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The company argued that these requirements were in violation of the European Union’s principle of freedom to provide services across the EU’s 27-country bloc. However, the EU’s highest court subsequently ruled that Airbnb must adhere to these requirements.

Italian authorities have intensified their scrutiny of the tax practices of major companies, including Airbnb, which has been operating in Italy since 2008. In recent times, Italian prosecutors have initiated tax-related investigations against other tech giants such as Netflix and Meta.

Last month, Italian politicians announced plans to crack down on landlords who fail to pay taxes on short-term rentals facilitated by platforms like Airbnb. The co-ruling Forza Italia party disclosed its intent to introduce a national identification code for short-term rentals, aimed at ensuring tax compliance and revenue transparency.

Forza Italia’s leader and Deputy Prime Minister, Antonio Tajani, stated, “That code will bring out the revenue of those who rent flats without declaring them.” This initiative is estimated to potentially increase Italy’s fiscal revenue by €1 billion.

Sana Q. November 7, 2023