Five hundred and seventy-six million euros to close the deal with the tax authorities. The platform of AirBnb short rentals has reached an agreement with the Revenue Agency in relation to the withholding tax of 21% on rents collected from tenants and paid to private landlords (non-professional hosts) between 2017 and 2021. To close the dispute Airbnb will pay 576 million euros and will not attempt to recover tax withholdings for this period from the hosts. “We are also continuing constructive discussions with the authorities regarding the 2022-2023 period. Italy is an important market for Airbnb” underlines the company in a note.
AirBnb: here's what's happening
At the beginning of November the Milan Financial Police had carried out a seizure of over 779 million euros for tax crimes against Airbnb Ireland Unlimited Company, the company that owns the short-term rental platform.
At the center of the investigation by the Milan Prosecutor's Office was the alleged failure to apply a decree which came into force in 2015 and which required the platform to withhold the flat rate tax at 21% on short-term rentals for a total amount of over 3,5 billion euros (3.711.685.297 to be exact). The figure relates to the years between 2017 and 2021.
Through a note, the prosecutor's office explained that "the tax audit revealed that the company did not comply with the obligations introduced by article 4 of Legislative Decree 50/2017, evading declaration and payment, as a withholding tax, withholdings of an amount equal to the amount of the seizure obtained by the investigating judge, calculated at 21% on short-term rental fees for 3,7 billion relating to the period 2017-2021 from guests of accommodation facilities advertised by the platform. The amounts were subsequently repaid to the owners of the properties, net of the commission for the use of the digital platform".
Airbnb claimed that it was not required to pay the Italian government the 21% “dry tax” as withholding agent and had filed appeals against the measure in Italy and Europe, but saw their reasons rejected.
Airbnb makes peace with the tax authorities and pays 576 million
How do you get to 576 million? The sum - explain the Revenue - is made up of 353 million for withholdings due and not paid, 174 million in sanctions and 49 million in interest.
“The amount – underlines the AdE – was determined following the reconstruction of the tax base on which the company should have applied the 21% withholding tax” in the years taken into consideration.
Airbnb warns hosts: “Get in compliance”
In an email sent to Airbnb hosts, the company highlighted that the agreement signed with the Revenue does not cover the 2022 and 2023 tax years, and invites them to comply.
“The agreement stipulated by Airbnb – reads the message sent by the company – does not include the tax years 2022 and 2023. The deadlines for paying income taxes for 2022 and for submitting the relevant declaration have expired. We invite hosts who don't
have yet to contact their tax advisor in order to evaluate the opportunity to use active repentance by February 28, 2024 to benefit from reduced penalties due to late payment and declaration of taxes".
Simply put, for 2022, AirBnb invites users who have not yet done so to pay the undeclared amount through voluntary repentance. For 2023 income, which will be declared in 2024, they will have to do so independently.
