Italy asks Airbnb to pay $835 mn over alleged tax evasion

London : Hospitality major Airbnb has been ordered by an Italian public prosecutor to pay $835.5 million (779.5 million euros) over alleged tax evasion, the media reported on Tuesday. According to the prosecutors, Airbnb allegedly failed to collect tax from landlords on around 3.7 billion euros in rental income, reports the BBC.

Landlords in Italy are required to pay a 21 per cent tax on their earnings. Last year, Airbnb had challenged the Italian law requiring the company and other rental providers to withhold 21 per cent of the rental income from landlords and pay it to tax authorities.

In a statement, Airbnb said it was "surprised and disappointed at the action announced by the Italian public prosecutor". “We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue,” an Airbnb spokesperson was quoted as saying.

Italian authorities have increased scrutiny of the tax practices of major companies like Airbnb in recent years. In its third quarter 2023 financial results announced last week, Airbnb Co-Founder and CEO Brian Chesky said that over the last nine months, “we’ve added nearly 1 million listings globally and we continue to see demand for travel grow.”

The company registered revenue of $3.4 billion, 18 per cent growth year-over-year and net income was $4.4 billion, or $1.6 billion excluding the one-time income tax benefit. The increase in revenue was driven by solid growth in Nights and Experiences Booked, a modest increase in Average Daily Rate (ADR) and an FX tailwind.