Airbnb to provide tax information to Italian authorities under CJEU ruling

Belgium / Italy: The Court of Justice of the European Union [CJEU] has ruled that Airbnb must pass on information regarding its rental contracts and share 21 per cent of the rental income with tax authorities in Italy. 

Airbnb challenged the law concerning rental contracts and income, which was passed in 2017, in an Italian court, arguing that such measures were in direct contravention of the principle of freedom that allows the 27 EU member states to provide services to each other.

Following the legal challenge, the Italian court took the case to the CJEU.

A statement from the CJEU read: “EU law does not preclude the requirement to collect information or to withhold tax under a national tax regime. However, the obligation to appoint a tax representative constitutes a disproportionate restriction on the freedom to provide services.”

Italian non-governmental organisation [NGO] Federalberghi, which promotes tourist accommodation, economic and trade union institutions and organisations promotion across the country, insinuated that Airbnb had ignored its tax duties in Italy, alleging that Airbnb owed the inland revenue up to €1.5 billion [$1.6 billion] over a six-year period for withholding information.

In a statement, it said: “Tax evasion and unfair competition damage both traditional tourist businesses and those who correctly manage the new forms of hospitality.

In response, an Airbnb spokesperson told Reuters that the company was already working with the EU to pay the correct amount of host income tax in line with the agreed reporting framework: “Airbnb does not have a tax representative to enforce the withholding of income tax in Italy, and the CJEU’s ruling makes clear that any requirement to appoint one is contrary to EU law. We will continue to make progress on the EU’s bloc-wide approach to income tax reporting while we await the final decision of the Italian court.”

The news comes just over a month after the European Commission adopted a formal proposal for regulation that would require short-term accommodation booking platforms [including Airbnb, Booking.com, Expedia Group and TripAdvisor] to share host identification and activity data with the Commission, in order to “enhance transparency” and “help public authorities ensure the balanced development” of a sustainable tourism and short-term rental sector.

This week, Airbnb published a new position paper in response to the proposal, in which it said that it endorsed the potential new EU rules.

In a statement, Airbnb said that it was already working with policymakers from across the EU on establishing and enforcing “fair and transparent” short-term rental rules. The company added that it believes the EU proposal is “a major step forward that can introduce clear, simple and harmonised rules that unlock the benefits of hosting for European families and give governments the information they need to clamp down on speculators and over-tourism”.

To ensure that the proposal delivers on the EU’s objective, Airbnb recommended that a single data-sharing portal be brought in for platforms at an EU level to streamline the sharing of data, voiced its support for the European Commission playing a more active role in assessing and verifying the proportionality of registration schemes across the bloc, and pushed for the enforcement of proportionate rules within the scope of the EU proposals.

Nathan Blecharczyk, co-founder and chief strategy officer of Airbnb, said: “Hosting is an economic lifeline for Europeans to afford rising living costs but complex local rules often exclude families from the financial benefits it offers. The EU is a world leader on digital regulation and these proposals offer hope for a way forward that could unlock new economic opportunities for more everyday hosts.

“Airbnb has long supported the EU’s work for new STR rules and we will share our experience of working with member states to develop EU-wide rules that work for everyone,” he added.