In a significant legal blow to short-term rental giant Airbnb, an Italian judge has ordered the seizure of €779.5 million ($835.5 million; £676.8 million) over alleged tax evasion. The ruling comes after prosecutors accused Airbnb of failing to collect a 21% tax from landlords on approximately €3.7 billion of rental income.
Airbnb, a company operating globally, expressed surprise and disappointment at the action taken by the Italian public prosecutor. Christopher Nutly, an Airbnb spokesperson, revealed that the company’s European headquarters had been actively engaged in resolving the matter with the Italian tax agency since June. He 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 former managerial employees at Airbnb, who held roles from 2017 to 2021, are under investigation in connection with the alleged tax evasion, as confirmed by Milan Tribunal prosecutors.
This legal battle follows Airbnb’s challenge to an Italian law in 2022, which 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 Italy’s tax requirements violated the European Union’s principle of freedom to provide services across its 27 member countries. However, the EU’s top court ruled against Airbnb, affirming Italy’s right to enforce the taxation law.
Italian authorities have recently intensified their scrutiny of major companies’ tax practices, with Netflix and Meta also facing tax-related inquiries. Last month, Italian politicians announced plans to crack down on landlords who evade taxes on short-term rentals facilitated through platforms like Airbnb.
The co-ruling Forza Italia party unveiled a proposal to introduce a national identification code for short-term rentals, aiming to track individuals who rent properties without proper declaration. Forza Italia leader and Deputy Prime Minister Antonio Tajani explained, “That code will bring out the revenue of those who rent flats without declaring them.” Politicians estimate that this move could potentially boost Italy’s fiscal revenue by €1 billion.
As Airbnb grapples with legal challenges and regulatory changes, the outcome of this case could have far-reaching implications for the company and the broader short-term rental industry in Italy and beyond. The situation continues to unfold as legal proceedings progress, with stakeholders closely watching the developments in this landmark case.