Italy seizes from Airbnb $836M in alleged unpaid taxes

Italy's finance police, the Guardia di Finanzia, has seized $836 million (€779 million) from Airbnb that the plod claims is unpaid tax.

"Airbnb Ireland has been in active discussions with the Italian tax agency since June 2023 to resolve this matter," the short-term rental biz said in a statement.

"We are surprised and disappointed at the action announced by the Italian public prosecutor on Monday. We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue."

The measure was reportedly ordered by investigating judge Angela Minerva based on the conclusion of a tax audit performed by the Guardia di Finanzia. That audit determined Airbnb failed to withhold 21 percent of landlord rental income on short-term rental payments totaling over €3.7 billion ($3.97 billion) between 2017 and 2021 meant for payment to the country's tax authorities.

Monies due go back to 2017 - the year Italy introduced a law requiring short-term rental platforms withhold both host income tax and occupancy tax.

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Airbnb challenged the rule in December 2022 in Italian and EU courts. The court mostly ruled in Italy's favor – that the EU member states could pass such laws to withhold tax, but the court said the obligation to appoint a tax representative is contrary to EU laws.

Airbnb is based in Ireland and has a subsidiary in Italy.

The company told local media it is not subject to the Italian tax legislation as it follows EU-wide DAC7 tax framework. It told international media it would continue fighting in court.

"For years now Airbnb has taken the deliberate corporate option" of not complying with Italian legislation on the payment of tax on short-term rentals "with the main aim of not risking the loss of market shares in favor of competition," asserted Judge Minerva (as auto translated from Italian.)

According to Judge Minerva, Airbnb allegedly evaluated four different strategies for dealing with Italian tax regulators. Those strategies, according to the judge's filing allegedly included defending its position and managing years of tax litigation; abandoning online payments – an option that would lead to a decrease in revenues; compliance but with voluntary adherence from the hosts; and lastly, full compliance even though it would cause an increase in listing prices and loss of market share.

According to the judge, however, the tax audit determined that Airbnb should have collected taxes on behalf of most Airbnb hosts, with exemptions made for stays longer than 30 days, landlords with a VAT number, or hosts with more than four rentals during the year 2021.

Italy's ruling party has reportedly said it wants to introduce a national identification code for short term rentals as it cracks down on landlords skipping out on taxes from the income.

Italy is not the only place seeking to manage the perceived nuisance of Airbnb. Dallas, Barcelona, San Francisco, Seattle London, Paris, Singapore, New York City, Vancouver and Tokyo are some of the cities that have placed restrictions on short term rentals. ®