Milan [Unsplash]

Italian judge orders seizure of €779m in Airbnb tax probe

Italy: A judge in Italy has ordered the seizure of €779.5 million [£676.8 million / $831.6 million] from Airbnb’s European headquarters in Ireland over a probe into alleged tax evasion, the Milan prosecutors’ office said on Monday.

In a statement released by the prosecutors, they allege that the home-sharing firm failed to collect a mandatory 21 per cent of landlords’ rental income [the income is said to have come in at around €3.7 billion] and pay it to the Italian tax authorities, as per a 2017 law in the country.

In addition, three unnamed people who served in managerial roles at Airbnb between 2017 and 2021, the period during which the violation is alleged to have place, are under investigation, according to the statement.

In response, Airbnb said that it was “surprised and disappointed at the action announced by the Italian public prosecutor”. A company spokesperson added that Airbnb was confident that it had “acted in full compliance with the law” and that Airbnb Ireland had been in active discussions with the Italian tax agency since June to resolve the matter.

Last year, Airbnb challenged the law that was introduced in 2017 and cited by prosecutors in the statement, which requires all short-term rental providers to withhold 21 per cent of landlords’ rental income and pay it to the national tax authorities. The firm argued that Italy’s requirements on taxation were in contravention of the European Union’s principle of freedom to provide services across the bloc of 27 countries, however the Court of Justice of the European Union [CJEU] ruled in the Italian government’s favour last December.

In recent years, the Italian government has sought to scrutinise the tax practices of global corporations operating in the country. Airbnb is not the only major company to be targeted, though, with Netflix and Meta also said to be the subjects of tax-related inquiries.

Prime Minister Giorgia Meloni, of the right-wing populist political party Fratelli d’Italia [Fdl – Brothers of Italy], is planning to intensify the crackdown on short-term rental property owners by raising taxes from 21 per cent to 26 per cent for those who own and rent out more than one property.

Meanwhile, the co-ruling Forza Italia party [centre-right liberal-conservative] wants to introduce a national identification code for short-term rentals to prevent tax evasion in the future. Some politicians believe that such a move could add around €1 billion to Italy’s fiscal revenue overall.

Earlier this year, a bylaw was approved in the Tuscan city of Florence which bans new short-term rental properties in the historic city centre from listing on platforms such as Airbnb. The bylaw, which is not retroactive, is designed to encourage a reduction in short-term rentals, as well as to grant owners and landlords a three-year tax break from second home municipal taxes if they switch to longer-term residential rentals.

Similar laws have also been mooted in cities such as Milan, Bologna, Rome and Venice.

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