The tax authorities in Italy have recently announced that they plan on confiscating around €779 million in unpaid taxes from Airbnb.

According to the authorities, the platform has allegedly neglected to pay taxes that it owes to the hosts who use its services.

The specified amount aligns with unpaid taxes that the hospitality giant apparently did not pay to the authorities on behalf of the owners from the years 2017 to 2021.

Total revenue

The European arm of Airbnb, which is based in the country of Ireland, was revealed to have generated around 3.7 billion euros during those years.

All of this was said to have been generated in rental revenue in Italy between 2017 and 2021 alone.

From this number, 21% was identified to be the tax that the company owes to the relevant authorities in the country.

However, the information at hand did not clarify whether the individual owners would be held liable in the matter.

As per sources, a number of European countries, such as Italy, need help trying to find profitable opportunities presented by Airbnb.

Consequently, the authorities are worried about the potential disruption that could be caused by short-term rentals in the local housing markets of all the countries in which the hospitality giant operates.

Tax authorities

In a bid to address this issue, the tax authorities in Italy took to implementing a registration and licensing system for all landlords participating in short-term rentals.

As a result, Airbnb was forced to implement and collect a flat tax from the hosts who were using its services.

Despite the legislation, the company continued to resist this provision set forth by the authorities ever since its inception.

In the year 2017, Airbnb decided to raise objections to the newly passed law and cited several EU regulations, which offered it the freedom to carry out its business with the member states without being held back by any undue restrictions.

As a result, the court awarded the homestay company a small victory by overturning this new requirement of a full-time tax representative.

On the other hand, the judicial body based in Luxembourg took to siding with the individual countries in the EU.

It argued that these member states have the right to assert their authority to regulate, license, and tax short-term rentals.

Italy

The planned tax confiscation being undertaken by Italy is in line with the ongoing trend being observed across a number of member states within the EU.

It is a fact that short-term rentals have become economically advantageous for some countries, but the rest of the EU is wary of the transformative impact that they tend to have on local rental markets.

Consistent with this rising concern, the supreme court in the EU took to supporting the legitimacy of the authorities in Paris to impose restrictions on all short-term rentals across the city.

It also took to shedding light on the possible negative effects that the overabundance of such rentals could have on housing affordability.