Airbnb agrees to pay Italy a hefty €576m to resolve tax dispute

Accommodation platform Airbnb has agreed to pay €576m ($620m; £496m) to settle a tax dispute with Italian authorities. The payment is related to income taxes that Airbnb failed to collect from individuals who rented out rooms or properties on its platform. Italian landlords are obligated to pay a 21% tax on their earnings. Airbnb has stated that it will not seek to recover the unpaid taxes from hosts directly. Last month, an Italian judge ordered the seizure of €779.5m from Airbnb's European headquarters in Ireland, accusing the company of tax evasion. Airbnb has agreed to pay approximately 75% of what is owed by thousands of landlords. Italy, with popular tourist destinations such as Venice, Florence, and Rome, is a significant market for the company. The Italian authorities have recently launched investigations into the tax practices of major companies like Airbnb. In 2022, Airbnb challenged an Italian law that required it to withhold 21% of rental income from landlords and remit it to tax authorities, arguing that it contradicted the EU's principle of freedom to provide services across member states. However, the EU Court of Justice ruled against Airbnb, stating that it must comply with the law. Italian prosecutors have alleged that Airbnb failed to collect taxes on nearly €3.7bn ($4bn; £3bn) of rental income. Airbnb maintains that the majority of its landlords are regular families looking to supplement their income and has no intention of recovering the outstanding sum from them. The Italian government, led by Prime Minister Giorgia Meloni, is making efforts to combat tax evasion in the short-term rental market by increasing taxes from 21% to 26%. This settlement is seen as a victory for the government and is likely to please some hotel owners who argue that platforms like Airbnb create unfair competition.