Airbnb to pay over $620M in settlement to Italy's tax agency

Short-term rental platform Airbnb says it has agreed to pay Italy's tax agency $621M to settle a dispute over alleged tax evasion.

Italy's financial police seized over $840M from the company last month on the order of Milan prosecutors, who accused the site of having failed to collect a rental income tax from landlords in the period from 2017 to 2021.

"Airbnb has finalised a settlement" which "covers host withholdings during the 2017 to 2021 period, for an aggregate payment of $621M," the company said in a statement.

"We are not seeking to recover any of this sum from our hosts."

It added: "We are continuing our constructive engagement with the Italian authorities for 2022 and 2023."

Airbnb use has grown dramatically in recent years across the world, with the US based platform allowing users to find accommodation in a private home rather than a hotel.

Reining in rentals

But Italian authorities have been trying to rein in tourist rentals in part by fighting tax evasion by owners of short-term lettings.

The online accommodation service said Italy was "an important market for Airbnb", home to thousands of hosts, the majority of whom are ordinary families that use its platform for supplemental income.

The deal follows years of tensions over a 2017 Italian law which requires short-term rental platforms which process payments to withhold host income tax rules Airbnb has challenged in court.

In a statement, Airbnb said the Italian government's recent budget plans clarify how this process should work.

The company says it would "comply by introducing new tools for applicable hosts to have their taxes withheld automatically by Airbnb, and pai d to the Italian Revenue Agency on their behalf directly".

Italy's draft 2024 budget law, published in October, says all tourist lettings will be given a "national identification code".

The move would oblige renters to register and provide much-needed "transparency", according to Deputy Prime Minister Antonio Tajani.

It would also bring money into the state coffers and "reduce the tax burden" on families, he said at the end of October.

Owners of short-term rental apartments currently pay a 21 percent rental income tax.

That rate will stay for the first apartment rented out by a host. But the government plans to raise the tax to 26 percent for all further apartments rented out for a period of fewer than 30 days.

The introduction of a "national identification code" was welcomed by hotels owners, who have long complained of "unfair competition" from short-term tourist rentals, which are also accused of driving up rents and aggravating a shortage of affordable housing.