Airbnb is paying $621 million to settle its tax dispute with Italy

Airbnb has agreed to pay 576 million euros ($621 million) to settle a longstanding dispute over unpaid taxes in Italy.

Italian prosecutors said last month that the company owed as much as €779 million ($840 million) in short-term rental taxes that it had failed to pay on behalf of hosts using the platform between 2017 and 2021. Italian tax authorities had threatened to seize the funds.

Airbnb said in a statement Wednesday that it would not try to recover any of the money from its hosts. It said it was working on introducing new tools for hosts to have their taxes withheld automatically by Airbnb and paid to the Italian authorities directly on their behalf.

“The vast majority of hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income,” the company said. “We hope the agreement with the Italian Revenue Agency and recent legislative changes in Italy will provide these families with certainty about the rules around hosting for years to come.”

Italy is an important market for Airbnb, with thousands of hosts using the platform to rent their properties. The typical host earned just over €3,500 last year.

According to Italian prosecutors, the company generated around €3.7 billion ($3.96 billion) in rental income in Italy between 2017 and 2021, of which 21% was due in taxes.

Airbnb had argued in a European Union court that the tax on short-term rentals, introduced in 2017, was not legal under the bloc’s regulations, but lost the case in December last year.

Italy has had success previously in recovering taxes from US tech platforms. In 2017, Google (GOOGL) agreed to pay Italy €306 million ($327 million) to cover taxes for the years 2009 to 2015. And in 2015, the country worked out a similar unpaid tax deal with Apple (AAPL) worth €318 million ($340 million).

The settlement with Airbnb comes as the government of Prime Minister Giorgia Meloni seeks to crack down on rampant tax evasion and raise the tax rate on short-term lets — such as those provided by Airbnb — to 26%.

Airbnb said in its statement that it welcomed clarity provided by the Italian government’s 2024 Budget Law on how platforms should withhold income taxes for non-professional hosts in Italy in the future, as well as the progress of national short-term rental rules in Italy, including a national registration system.

“These improvements will make it easier for historic centers such as Venice and Florence to see who is hosting and how often, and to develop proportionate policy solutions in response. Airbnb is committed to working with Italian authorities to make the rules a success.”