Airbnb Settles €576 Million Tax Dispute with Italian Authorities.

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 2022, alleging the platform failed to collect a 21% tax on rental income received by hosts during the specified period.

In a press release, Airbnb confirmed that it would not seek to recover any portion of the settlement amount from its hosts. The company emphasised its commitment to constructive engagement with Italian authorities in 2022 and 2023, underscoring Italy's significance as a crucial market for Airbnb.

The tax dispute highlighted the Italian government's efforts to combat tax evasion in the short-term rental sector. In October 2022, the government announced its intention to intensify the fight against tax-evading short-term rentals and increase taxation on owners offering more than one property on platforms like Airbnb.

As part of the draft 2024 budget amendment, a "national identification code" associated with tourist accommodations will be introduced to track undeclared properties, increasing transparency and regularising the system. The amendment also plans to raise the tax rate, applying a 26% rate for owners renting multiple properties for less than 30 days.

Airbnb acknowledged the planned changes in Italian law and expressed its commitment to compliance. The company stated that it appreciates the clarity the proposed update offers and is getting ready to introduce new tools for applicable hosts to have their taxes automatically withheld and paid to the Italian Revenue Agency on their behalf.

Short-term rental platforms like Airbnb have faced criticism from hotel professionals, who argue that they contribute to unfair competition, rising rents, and a shortage of affordable housing in tourist towns. The settlement in Italy adds to the ongoing discussions globally about the regulatory challenges and tax implications associated with the rapidly growing short-term rental market.