Airbnb logo on phone screen. Airbnb pays tax bill

Airbnb agrees to pay tax bill of €576million to Italy

Business News

Short-term rental platform Airbnb announced its agreement to pay €576 million in a tax bill, settling a dispute over alleged evasion.

Italy’s financial police seized over €779 million from Airbnb last month based on accusations from Milan prosecutors that the company failed to collect rental income tax from landlords between 2017 and 2021.

In a statement, Airbnb confirmed the settlement, specifying that it covers host withholdings for the 2017 to 2021 period, with no intention of recovering the sum from hosts.

“Airbnb Ireland has finalised a settlement” which “covers host withholdings during the 2017 to 2021 period, for an aggregate payment of 576 million euros,” the company said in a statement.

“We are not seeking to recover any of this sum from our hosts.”

It added: “We are continuing our constructive engagement with the Italian authorities for 2022 and 2023.”

Neil Saunders, Managing Director at Globaldata, noted that while the settlement marks the conclusion of the tax case, it represents a substantial amount for Airbnb, potentially impacting short-term earnings. However, he expressed confidence that Airbnb’s decision not to recover the money from hosts would preserve trust in the platform among hosts and travellers in Italy.

Italy an essential market for Airbnb

Airbnb acknowledged Italy as an essential market and highlighted its commitment to compliance with new tools for automatic tax withholding, as clarified by the Italian government’s recent budget plans. These plans include assigning a “national identification code” to all tourist lettings, aiming to enhance transparency, increase state revenue, and alleviate the tax burden on families.

The current 21% rental income tax rate for the first apartment rented by a host will remain, but the government intends to raise it to 26% for subsequent apartments rented for fewer than 30 days.

The introduction of the “national identification code” was praised by hotel owners, who have long criticised short-term tourist rentals for unfair competition, rising rents, and exacerbating affordable housing shortages.

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