The massive short-term rental company Airbnb has been ordered to forfeit €779.5 million ($835.5 million; £676.8 million) by an Italian judge due to suspected tax fraud.
BBC reported that the company, according to prosecutors, neglected to charge landlords a tax on around €3.7 billion in rental income.
In Italy, there is a 21% income tax that landlords must pay. Regarding the proceedings taken by the Italian public prosecutor, Airbnb said that it was “surprised and disappointed.”
According to a spokesperson for the company, the European headquarters of Airbnb, Christopher Nutly, has been attempting to settle the issue with the Italian tax authority since June.
Mr. Nutly continued, “We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.”
The Italian law that required Airbnb and other short-term rental services to deduct 21% of rental income from landlords and submit it to tax authorities was challenged by the firm in 2022.
The company contended that Italy’s taxation policies went against the EU’s premise of freedom of service provision within the 27-country union.
Later, a top court in the European Union decided that Airbnb had to follow the rules.
Italian authorities have been more closely examining big businesses’ tax policies in recent years, such as Airbnb, which has been doing business in the country since 2008.
Media reports state that tax-related investigations against Netflix and Meta have been opened by Italian authorities.
Politicians in Italy announced last month that they intended to take tough measures against landlords who failed to pay taxes on short-term rentals booked through services like Airbnb.
The country will take steps to develop a national identity code for short-term rentals, according to the co-ruling Forza Italia party.
“That code will extract the income from those who lease apartments without disclosing them,” the leader of Forza Italia and deputy prime minister, Antonio Tajani, stated to reporters.
Politicians predict that the action will increase Italy’s tax revenue by €1 billion.