Italian authorities have taken decisive action in an ongoing tax evasion investigation, ordering the seizure of €779.5 million from the European headquarters of the renowned short-term rental platform Airbnb. The investigation revolves around allegations that Airbnb failed to comply with a 2017 law which stipulates the withholding of 21% of landlords’ rental income, subsequently requiring its remittance to the Italian tax authorities.
According to the Milan Tribunal prosecutors, the investigation includes scrutiny of the period between 2017 and 2021, with three former managers also being investigated in relation to the evasion case.
“We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue”, Airbnb spokesperson, Christopher Nutty, told the BBC, adding that the company was “surprised and disappointed at the action announced by the Italian public prosecutor” since they have been in discussions over the matter with the Italian tax agency since June 2023.
In a previous legal confrontation last year, Airbnb contested the validity of the 2017 law, arguing that Italy’s taxation requirements were in violation of the European Union’s principle of enabling the free provision of services across the 27-country bloc. It lead to a protracted legal battle that culminated in the European Court of Justice ruling in favor of the Italian government, cementing the law’s applicability in December.
Recently, the Italian government has underscored its determination to combat tax evasion within the short-term rental sector. Plans are underway to enact a tax increase, raising the rate from 21% to 26% for those who rent out multiple properties on the platform.
Additionally, authorities are planning on introducing a national identification code for short-term rentals. “That code will bring out the revenue of those who rent flats without declaring them”, explained Deputy Prime Minister Antonio Tajani, estimating €1 billion will be added to the public budget thanks to the code forcing landlords to declare all their revenues.
