What just happened? Italian police have seized more than €779 million (about $836 million) from Airbnb over unpaid taxes. The seizure came after prosecutors in Milan accused the home-sharing company of failing to pay a 21 percent withholding tax on €3.7 billion ($3.95 billion) in rental revenue.Thank you for reading this post, don't forget to subscribe!
Landlords in Italy are required by law to pay a 21 percent tax on their rental earnings, and it is the responsibility of rental providers like Airbnb to collect that tax. According to the law, it was up to Airbnb to withhold the tax amount from landlords’ rental income and pay it to the government. Prosecutors allege the company did not do so, thereby violating Italian law and necessitating police action.
In a statement released to the BBC after the seizure, Airbnb said it was “surprised and disappointed” by the police action, and said it had been in talks with Italian tax authorities on the issue for months. The company also claimed that it has always complied with EU laws, and said it intended to continue fighting the case in court.
The Italian law that requires home-sharing companies and rental providers to withhold 21 percent tax from landlords dates back to 2017. Airbnb challenged the law through the EU Court of Justice last year, but its effort proved unsuccessful. In its decision, the court ruled that EU member states have the right to require rental platforms to collect taxes on behalf of the government, and that Airbnb must comply with Italian laws if it wants to do business in Italy. .
Along with Airbnb, several other US tech companies, including Facebook parent company Meta and streaming giant Netflix, are also under investigation by Italian authorities. While Netflix was ordered to pay €55.8 million (roughly $59 million) last year to settle a tax dispute with the country’s tax authorities, Meta currently owes nearly €870 million (roughly $928 million) in alleged unpaid taxes. Value-added taxes are facing scrutiny. ,
As far as Airbnb is concerned, the company is facing scrutiny not only in Italy, but also in several other major markets around the world. According to reports, Dallas, Barcelona, San Francisco, Seattle, London, Paris, Singapore, New York City, Vancouver, and Tokyo have banned short-term rentals after various untoward incidents and protests from local residents and businesses.