By Barbie Latza Nadeau, CNN
Rome (CNN) — Italy’s tax government is set to seize about 779 million euros ($836 million) from Airbnb for its alleged failure to pay taxes owed through the platform through owners.
It’s the latest sign of the intense scrutiny of short-term rentals that have proliferated in major cities across Europe and the United States.
The seizure was ordered by the Milan prosecutor’s office for tax crimes and the sum is equivalent to the amount that Airbnb (ABNB) failed to pay on behalf of the owners between 2017 and 2021, the prosecutor’s office reported last Monday.
The Ireland-based company’s European arm generated about 3. 7 billion euros ($3. 96 billion) in rental income in Italy in that period, of which 21% was due to taxes, according to the statement. It’s unclear if some landlords will be charged any fees. form.
Airbnb had argued before a European Union court that the short-term rental tax, introduced in 2017, was not legal under EU rules, but lost the case in December last year. However, he did not pay the back taxes.
Prosecutor Marcello Viola told Italian reporters on Monday that three other people who were Airbnb managers in Italy were also facing unpaid taxes.
An Airbnb spokesperson told CNN on Tuesday: “Airbnb Ireland has been in active discussions with the Italian tax firm since June 2023 on this issue. We are surprised and disappointed by the action announced on Monday through the Italian Prosecutor’s Office. We are self-assured that we have acted in full compliance with the law and intend to exercise our rights in relation to this matter.
Enforcing this decision, which Airbnb can still appeal, won’t be easy, even if there is precedent. In 2017, Alphabet-owned Google (GOOGL) agreed to pay Italy 306 million euros ($327 million) to cover taxes starting in 2009. And in 2015, the country signed a €318 million ($340 million) deal with Apple on unpaid taxes (AAPL).
The move comes as Prime Minister Giorgia Meloni’s government seeks to crack down on endemic tax evasion in the country and increase the tax rate on short-term rentals, such as those filed through Airbnb, from 21% to 26%.
Officials are also tightening the screws on the company. In September, the New York City government introduced regulations requiring Airbnb homeowner directories for stays of less than 30 days to apply for an official registration number. Airbnb called the regulations a “de facto ban” on short-term rentals in the city.
Italian Foreign Minister Antonio Tajani told reporters last week that new rental codes would soon be introduced to crack down on other people who do not declare profits on their short-term rentals. He said the move could boost Italian tax revenues by 1 billion euros. ($1. 1 billion) a year.
— Anna Cooban contributed to this report.
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