Airbnb and tax problems. Italian resolution
According to the agreement between Airbnb and Agenzia delle Entrate (Italian fiscal boureau). Airbnb will pay to the tax authorities € 576 milion ($ 621 million).
The amount was calculated on the estimate of the tax base on where the company should have applied the 21% withholding tax during the period 2017-2021. Airbnb will not try to recover the withholding tax from the hosts.
Summary:
2017: Italian law establishs that the web platform has the obligation to withdraw a 21%
2017-2021: Airbnb didn’t act as a tax withholding agent and didn’t pay any tax
2022, December: the European Court of Justice said that Airbnb will must be a withholding agent
2023, November: the Italian Finance Police confiscated € 779 million.
2023, December: an Agreement was rich between Airbnb and the Italian fiscal boureau
What happened before?
Airbnb and tax problems: a tax investigation
In November 2023 the Finance Police confiscated € 779 million ($ 840 million) from Airbnb after it allegedly failed to pay some tax. Airbnb didn’t pay Italy the 21% withholding tax owed on about € 3.7 billion ($ 3.9 billion) of rental revenue, according to the statement.
The tax investigation started after a fiscal check on 3 May 2022 about the period 2017-2020 and with extention to 2021.
According to the Italian law of 2017 (art. 4 of DL 50/2017), Airbnb had the obligation to withdraw a 21% (26% from 2024) share from the proceeds of non-professional hosts which they then have to pay to the Italian tax authorities.
According to the judge, in the last years Airbnb refused to pay this type of obligation because it didn’t want to lose market share and so favore competitors who don’t use online payment.
Concerned hosts
Airbnb and tax problems could be a problems for the hosts. When the confiscation arrives a lot of hosts were worried. Indeed, Airbnb and the hosts are jointly and severally obliged to pay tax. If Airbnb doesn’t pay tax then the hosts have to pay the tax. During 2017-2021, they don’t know anything about the Airbnb’s policy, the confiscation was a bad surprise.
European Court of Justice sentence
In the same time, Airbnb struggled with Italy in front of the European Court of Justice because Airbnb didn’t think it had to play the role of withholding agent and he thought that the Italian law was not legitimate. In 22 December 2022 the European Court of Justice says that Italian position is legitimate.
Airbnb is withholding agent
Ultimately, Airbnb is a withholding agent according to Italian law of 2017. The sentence of the European Court of Justice noted that in the 2024 budget law that establishes all the web platforms have to be withholding agents when the hosts is not professional.
The Hosts does not have to pay the old withholding tax
Airbnb will pay to the Italian tax authorities € 576 million and says it won’t try to recover the money from the hosts for the 2017 – 2021 period. Today, Airbnb and tax problems are not problems for hosts.
Airbnb and tax reporting framework
Furthermore, Airbnb says that it’s prepared to comply with DAC 7, an EU-wide tax reporting framework for digital platforms. These rules are designed to ensure that governments receive the taxes they are due, while supporting a more consistent, standardized and international approach to information sharing. We have already been notifying Italian Hosts about how the changes may impact their activity on Airbnb and will continue to request DAC 7 information from them before the data are shared with Irish Revenue in January 2024 (where Airbnb Ireland is based), and subsequently on to the Italian Revenue Agency.
Finally, Airbnb claims to be satisfied about the progress of national short-term rental rules in Italy, including the Italian national registration system and the EU wide data sharing framework.
