Italy starts a $550 million case against Airbnb

Authorities want to get back taxes that the platform didn’t pay on the rent.

Il Sole 24 Ore, a national news outlet in Italy, reported on Friday that Italian officials say Airbnb, an online booking service based in the United States, didn’t pay about €500 million ($547 million) in taxes.

The outlet said the Italian Revenue Agency (Agenzia delle Entrate), which enforces financial rules and collects taxes, has started an investigation.

Italian law about short-term rental sites says that professional landlords who rent out rooms must pay a flat-rate tax of 21% on the money they make from renting. When hosts aren’t professionals or the rental of their home isn’t their primary source of income, platforms like Airbnb have to act as agents and take the tax out of the transaction before sending it to the government.

Most Airbnb offers are from hosts who need to be more professional. The platform has tried many times to challenge Italy’s laws, but it has yet to be successful. In December last year, the EU Court of Justice decided that Italian law does not conflict with other EU laws; this gave Italy the go-ahead to ask the platform for the tax.

Moving Markets

The story says that Airbnb has been talking with the Italian Revenue Agency for months about which hosts the company should act as a tax agent for. The news outlet said the final bill would rest on how many Airbnb hosts need to be more professionals.

Analysts have warned that once Airbnb and Italy’s tax authorities agree, the company can sue guests who haven’t paid the tax to get the money to pay the government’s bill.

If the estimates are correct, the €500 million payment will be the second-highest amount Italy has ever asked an internet company for, after the €870 million it asked Meta platforms for. At the beginning of this year, the global company that owns Facebook and Instagram was accused of not paying VAT in the country.

Il Sole 24 Ore says that Italy’s government has done more to fight tax evasion in the last ten years and has collected nearly €3 billion from companies that didn’t initially pay tax. Apple, Google, Meta, PayPal, and Netflix, all big names on the internet, spent more than €800 million.

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