A judge in Italy has ruled that the massive short-term rental company Airbnb must surrender €779.5 million ($835.5 million) due to suspected tax fraud.
According to the prosecution, the company neglected to charge landlords for over €3.7 billion in rental income. In Italy, landlords must pay a tax of 21% on their income.
“Surprised and disappointed at the action announced by the Italian public prosecutor,” Airbnb stated in a statement to the BBC.
According to Airbnb spokesman Christopher Nutly, since June, the company’s European headquarters has been attempting to settle the issue with the Italian tax authority. Nutly continued, “We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.”
Milan Tribunal prosecutors said in a statement that three individuals who occupied administrative positions at Airbnb between 2017 and 2021 were also the subject of an inquiry.
The Italian law that required Airbnb and other short-term rental services to deduct 21% of rental income from landlords and submit it to tax authorities was challenged by the firm in 2022.
The company contended that Italy’s taxation policies went against the EU’s premise of freedom of service provision within the 27-nation union.
Later, the highest court in the European Union decided that Airbnb had to follow the rules.
Italian authorities have been more closely examining big businesses’ tax policies in recent years, such as Airbnb, which has been doing business in the nation since 2008.
Tax-related investigations against Netflix and Meta have been started by Italian authorities, according to media reports.
Politicians in Italy said last month that they intended to take tough measures against landlords who failed to pay taxes on short-term rentals booked through services like Airbnb.
The nation will take steps to develop a national identity code for short-term rentals, according to the co-ruling Forza Italia party.
“That code will bring out the revenue of those who rent flats without declaring them,” Antonio Tajani, the leader of Forza Italia and deputy prime minister, stated to reporters.
Politicians predict that the action will increase Italy’s tax income by €1 billion.