Airbnb has recently made an announcement, saying that the relevant leadership has decided to settle the tax dispute it has in Italy.

The Italian tax authorities have accused the hospitality giant of evading taxes or simply refraining from paying them.

Consequently, Airbnb has decided that it will be paying a sum of €576 million to settle its ongoing dispute.

Violation

The relevant authorities in Italy alleged that the company had violated a 2017 Italian law and failed to remit a sum totaling €779 million.

This complete amount was attributed to short-term rental taxes, which are owed by Airbnb on behalf of the hosts that utilized the platform between the years of 2017 and 2021.

The Italian prosecutors asserted that the company chose not to pay any taxes during this time frame.

The prosecutors in Italy also claimed that the home-sharing giant did not gather the stipulated 21% of the rental income of all landlords.

This percentage of income amounts to a total of €3.7 billion, which Airbnb has to follow through on paying.

On this note, the company said that it will be settling approximately three-quarters of the total outstanding amount that is owed to it by thousands of hosts/landlords.

Italian market

It is a known fact that Italy is a significant market for the hospitality giant and attracts tourists from across the globe each year.

It is especially popular in the famous destinations of Italy, such as Florence, Rome, and Venice.

Consequently, it is a big deal to be facing considerable scrutiny from the Italian tax authorities.

Various investigations have thus been initiated into the tax practices of several major companies, including the home-sharing firm.

When slammed with the lawsuit for tax evasion, Airbnb argued that Italian tax law violated the principle of the Europeans that gives freedom to companies to provide services throughout the 27-county bloc.

However, the EU Court of Justice declared the hospitality organization to be in the wrong, saying that they need to comply with the law.

Budget Law

Soon after the company announced that it would be paying to settle the tax dispute, it expressed its appreciation for the clarity granted by the 2024 Budget Law released by the Italian government.

The relevant law covers guidance for those withholding income taxes for non-professional hosts residing in Italy.

The company went on to acknowledge the advancements being made in the short-term rental rules across the country, which includes the development of a national registration system in Italy.

Airbnb went on to state that such enhancement would allow it to ensure better oversight over various historical centers, such as Florence and Venice.

As a result, the authorities would quickly be able to identify hosts and assess hosting frequency.

It would also allow them to formulate appropriate policy solutions depending on hosts and hosting frequency.

Italy has managed to successfully recover taxes from various popular technology platforms in the United States.

As a result, Google agreed to pay $306 million to settle the tax levied by Italy, which covered the period between 2009 and 2015.