Italy to seize £675m from Airbnb in tax evasion inquiry

Three suspects who held managerial roles in period covering alleged violation also under investigation

Authorities in Italy have been ordered by a judge to seize £675m (€779.5m) from Airbnb after the San Francisco-based company allegedly failed to pay taxes for four years.

Airbnb had failed to withhold 21 per cent of rental income from landlords and remit it to Italian tax authorities from 2017-21, said the Milan prosecutor’s office on Monday. This was mandated by a 2017 law, prosecutors said.

Airbnb has “for years now” been “fully aware of the declaratory and social security charges introduced by the Italian legislature since 2017”, prosecutors Giovanni Polizzi, Cristiana Roveda and Giancarla Serafini were quoted as saying by newspaper Corriere della Sera.

The company, however, “has taken the deliberate corporate option of not complying with them, with the main aim of not risking the loss of market shares in favour of competition, openly obstructing the Italian tax authorities”, they said.

Three suspects are also under investigation by the Milan prosecutor’s office. They held managerial roles between 2017 and 2021, the period covering the alleged violation.

Airbnb said it was “surprised and disappointed at the action announced by the Italian public prosecutor on Monday”.

Christopher Nulty, a spokesperson for the company, said Airbnb’s European headquarters had been in “active discussions with the Italian tax agency since June 2023 to resolve this matter”.

“We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue,” he said.

Airbnb had last year challenged the Italian legislation which mandated the company and other short-term rental providers to deduct 21 per cent of rental income from landlords and remit it to tax authorities.

The company argued Italy’s taxation regulations violated the European Union’s principle of the freedom to offer services across the 27-country bloc. However, the EU’s top court later ruled that Airbnb must adhere to these requirements.

Italy’s hoteliers association Federalberghi welcomed the ruling, noting it was a plaintiff in the case, and effectively accused Airbnb of shirking its tax duties in Italy.

“Tax evasion and unfair competition damage both traditional tourist businesses and those who correctly manage the new forms of hospitality,” it had said in a statement.

The investigation by Italian and European authorities is not an isolated event. It is part of a larger investigation into tax practices of multinational corporations.

Earlier this year, Milan’s prosecutors initiated an inquiry into Meta, Facebook’s parent company, over the alleged non-payment of value-added taxes estimated at around £755m (€870m).

Bloomberg reported that in 2019, Italian prosecutors also investigated Netflix for allegedly failing to file a return, according to sources familiar with the matter at the time.

Additional reporting by agencies