Italian Authorities and Airbnb Agreement
Airbnb has agreed to pay €576 million to settle a tax dispute with Italian authorities covering the period from 2017 to 2021. This resolution comes after Italian tax authorities ordered the seizure of €779 million from Airbnb in November, alleging that the platform failed to collect a 21% tax on rental income received by hosts during the specified period.
No Recovery from Hosts
In response to the settlement, Airbnb stated that it will not seek to recover any portion of the €576 million from its hosts. The company emphasized its commitment to constructive engagement with Italian authorities for the years 2022 and 2023, underlining the significance of Italy as an essential market for Airbnb.
Thousands of Owners on Airbnb in Italy
According to Airbnb, Italy hosts “thousands of owners” on its platform, with an average annual income of approximately €3,500 in 2022. The company highlighted that the majority of hosts are ordinary families utilizing the platform for supplementary income, helping nearly two-thirds of them to meet their financial needs.
Italy’s Efforts Against Tax-Evading Short-Term Rentals
In October, the Italian government expressed its intention to intensify efforts against tax-evading short-term rentals, proposing an increase in taxation for owners offering more than one flat on platforms like Airbnb. A draft 2024 budget amendment suggested the creation of a “national identification code” linked to tourist accommodation to track undeclared properties. The move aims to enhance transparency, regularize the system, increase state revenue, and reduce the tax burden on families.
Airbnb’s Response and Compliance
Airbnb welcomed the planned update to Italian law in its statement, acknowledging the clarity it provides regarding income tax withholding for non-professional hosts in Italy. The company affirmed its readiness to comply by introducing new tools for applicable hosts, enabling automatic withholding of taxes by Airbnb, and direct payment to the Italian Revenue Agency on their behalf.
Industry Dynamics and Criticisms
Short-term rental platforms like Airbnb have faced accusations from hotel professionals of engaging in “unfair competition” and contributing to rising rents and a shortage of affordable housing in tourist towns. The settlement in Italy reflects ongoing challenges and regulatory scrutiny faced by such platforms in various regions.
SOURCE: Ref Image from Proactive Investors
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