London – December 14, 2023
In a significant development, Airbnb has reached an agreement to pay €576 million ($621 million) to settle a prolonged tax dispute with Italy. This resolution comes after Italian prosecutors asserted last month that the popular home-sharing platform owed up to €779 million ($840 million) in short-term rental taxes covering the period from 2017 to 2021, threatening potential fund seizures.
Addressing the matter in a statement on Wednesday, Airbnb confirmed its commitment to not seek reimbursement from its hosts. The company outlined plans to introduce new tools facilitating the automatic withholding of taxes by Airbnb on behalf of hosts, directing these payments directly to Italian authorities. This initiative aims to streamline tax processes and enhance compliance.
Highlighting the significance of the agreement, Airbnb stated, “The vast majority of hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income. We hope the agreement with the Italian Revenue Agency and recent legislative changes in Italy will provide these families with certainty about the rules around hosting for years to come.”
Italy holds particular importance for Airbnb, serving as a vital market with thousands of hosts leveraging the platform for property rentals. The average host earned just over €3,500 last year. Italian prosecutors revealed that Airbnb generated approximately €3.7 billion ($3.96 billion) in rental income in Italy between 2017 and 2021, with 21% allocated for taxes.
Airbnb had previously contested the legality of the tax on short-term rentals, introduced in 2017, in a European Union court. However, the platform lost the case in December of the previous year. Italy has a track record of successfully recouping taxes from major U.S. tech platforms, with Google agreeing to pay €306 million ($327 million) in 2017, covering taxes from 2009 to 2015, and Apple settling an unpaid tax deal worth €318 million ($340 million) in 2015.
The settlement with Airbnb aligns with Italy’s broader efforts, led by Prime Minister GiorgiaMeloni’s government, to combat widespread tax evasion. As part of these efforts, the government aims to increase the tax rate on short-term lets, including those facilitated by Airbnb, to 26%. Airbnb expressed appreciation for the clarity provided by the Italian government’s 2024 Budget Law regarding income tax withholding for non-professional hosts and the progress in establishing national short-term rental rules, including a national registration system.