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Airbnb to pay $628 million to settle Italian tax dispute

There's so much to see in Florence,  but visitors will have to stay in hotels. This year, the popular Italian destination ended short-term residential rentals. (Photo via Wikipedia Commons)

U.S. property owners are well aware that when their homes are regularly used as short-term rentals, taxes are involved.

Now that financial factor is gaining more traction abroad.

The short-term rental platform Airbnb agreed last week to pay 576 million euros ($628 million as of today's conversion rate) to settle a years-long dispute with Italy over unpaid rental taxes.

That's less than the around 779 million euros ($849 million) in taxes that Italian authorities said AirBnb owed on behalf of Italian properties leased via the service between 2017 and 2021.

But as tax officials worldwide know, getting most of a tax bill without having to go through time-consuming legal battles generally is worthwhile. That's also why €576 million ($628 million) is this week's By the Numbers figure.

Buona notizia for Italian landlords: If you were one of those Italian short-term landlords during those five years, don't freak out. You're off the tax hook in this deal.

"We are not seeking to recover any of this sum from our Hosts," said Airbnb in a statement posted at its website.

"Italy is an important market for Airbnb," added the Airbnb statement. Thousands of homes are rented short-term via the San Francisco-based country, with the typical Italian host earning just more than €3,500 ($3,816) last year.

Most of those renters, according to Airbnb, "are ordinary families that are using the platform for supplemental income. 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."

International third–party reporting: To keep those international renters in the fold and satisfy the country's tax collectors, Airbnb also noted it is "continuing our constructive engagement with the Italian authorities for 2022 and 2023."

Part of that constructive engagement no doubt will include new tools that Airbnb said it is working on that will allow Italian hosts to have their taxes withheld automatically and paid on their behalf to Italy's revenue agency.

The short-term rental clearinghouse already does that within the United States. Among its list of hosting responsibilities is a reminder for renters to "look up any local taxes or business license requirements that may apply."

It also has a section on tax documents, including the still evolving 1099-K regulations, the company will issue U.S. clients depending on the payments receive through Airbnb.

And a search of "tax" on the company's website reveals the range of its efforts domestically and globally to comply with tax authorities.

Tourism backlash: While it was in Italy's interest to accept the somewhat smaller tax payment, Airbnb's planned changes also are key to its continued operation.

The U.S. company acknowledged that in its statement's mention of sustainable tourism.

Of course, what is sustainable is different for short-term renters and permanent residents. Right now, the residents seem to have the edge.

A crush of post-COVID-19 pandemic travelers, has led several cities, both within the United States and globally, to take steps to stem the tourist tides they say have overburdened city services and inconvenienced locals.

New rules for New York City, including short-term landlords register with the city, have dramatically slowed the short-term rental business in what was one of Airbnb's biggest markets. 

In Europe, several cities have taken steps or plan to as a way to ease adverse effects of tourism.

Florence, Italy, this year banned new Airbnb listings. Vienna, Austria, next year plans to limit the amount of time homeowners can list their property on Airbnb to 90 days. Parisians who want to rent their primary residence must register with the local town hall, and are limited to 120 days of renting per year.

If you're planning to travel abroad, check out EuroNews.Travel's roundup of the cities and countries are cracking down on Airbnb-style rentals.

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