Italian tax authorities are poised to seize some €779 million ($836 million) from Airbnb as a result of its alleged failure to pay taxes owed by landlords using the platform.
It’s the latest sign of intense scrutiny of short-term rentals that have proliferated in big cities in Europe and the United States.
The seizure was ordered by the Milan-based public prosecutor’s office for tax offenses and the sum is equal to the amount Airbnb (ABNB) failed to pay on behalf of landlords between 2017 and 2021, the prosecutor’s office said in a statement late Monday.
The company’s Ireland-based European arm brought in around €3.7 billion ($3.96 billion) in rental income in Italy in that time, of which 21% was due in taxes, according to the statement. It is unclear if specific landlords will be charged in any way.
Airbnb had argued in a European Union court that the tax on short-term rentals, introduced in 2017, was not legal under the bloc’s regulations, but lost the case in December last year. It did not, however, pay the back taxes.
Prosecutor Marcello Viola told Italian reporters Monday that three people who were administrators for Airbnb in Italy also face unpaid tax charges.
A spokesperson for Airbnb told CNN Tuesday: “Airbnb Ireland has been in active discussions with the Italian tax agency since June 2023 to resolve this matter. We are surprised and disappointed at the action announced by the Italian public prosecutor on Monday. We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.”
Carrying out the ruling, which Airbnb can still appeal, won’t be easy, though there is precedent. In 2017, Google, owned by Alphabet (GOOGL), agreed to pay Italy €306 million ($327 million) to cover taxes for the years 2009 to 2015. And in 2015, the country worked out a similar unpaid tax deal with Apple (AAPL) worth €318 million ($340 million).
The ruling comes as the government of Prime Minister Giorgia Meloni seeks to crack down on rampant tax evasion in the country and raise the tax rate on short-term lets — such as those provided by Airbnb — from 21% to 26%.
Officials elsewhere are also tightening the screws on the company. In September, New York City authorities introduced rules requiring Airbnb landlords listing properties for stays of less than 30 days to apply for an official registration number. Airbnb called the rules a “de facto ban” on short-term rentals in the city.
Italy’s Foreign Minister Antonio Tajani told reporters last week that new rental codes would soon be introduced to clamp down on people who don’t declare profits on their short-term lets. He said the move could boost Italy’s fiscal revenue by €1 billion ($1.1 billion) a year.
— Anna Cooban contributed to this article.
