What just happened? Italian police have seized over €779 million (around $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.
Landlords in Italy are required by law to pay a 21 percent tax on their rental earnings, and the responsibility of collecting that tax lies with rental providers like Airbnb. According to the law, it was up to Airbnb to withhold the tax amount from the rental income of landlords and pay it to the government. The prosecutors allege that the company did not do that, thereby violating Italian law and necessitating police action.
In a statement released to the BBC following the seizure, Airbnb said it was “surprised and disappointed” with the police action, and stated that it has been having dialogues with the Italian tax authorities for months over the issue. The company also claimed that it had always complied with EU laws, and added that it intends to keep fighting the case in court.
The Italian law that requires home-sharing companies and rental providers to withhold the 21 percent tax from landlords dates back to 2017. Airbnb challenged the law through the Court of Justice of the European Union last year, but its attempt proved unsuccessful. In its judgment, the court ruled that EU member states are well within their rights to require rental platforms to collect taxes on behalf of the government, and that Airbnb should comply with Italian laws if it has to do business in Italy.
Alongside Airbnb, a number of other American tech companies, including Facebook’s parent company Meta and streaming giant Netflix, are also under investigation by Italian authorities. While Netflix was ordered to pay €55.8 million (around $59 million) to settle a tax dispute with the country’s tax authorities last year, Meta is currently facing a probe for alleged unpaid value-added taxes of about €870 million (around $928 million).
As for Airbnb, the company is facing scrutiny not only in Italy, but also in a number of other major markets around the world. According to reports, Dallas, Barcelona, San Francisco, Seattle, London, Paris, Singapore, New York City, Vancouver and Tokyo have all placed restrictions on short-time rentals following various untoward incidents and protests from local residents and businesses.
