BRUSSELS (Reuters) – Short-term accommodation services company Airbnb must provide information in rental contracts to tax authorities and withhold tax under a national regime, the country’s top court ruled on Thursday. ‘European Union.
The decision follows a challenge by Airbnb to a 2017 Italian law requiring Airbnb and other short-term rental sites to report information from their rental contracts to tax authorities and to withhold 21% of rental income and to pay them to the tax authorities. .
The company challenged the law in an Italian court, arguing that the taxation and other requirements violated the European principle of freedom to provide services in all 27 countries.
The Italian court then sought advice from the Court of Justice of the European Union (CJEU).
“EU law does not exclude the obligation to collect information or to withhold tax under a national tax regime,” the EU court said in a statement.
“However, the obligation to appoint a tax representative constitutes a disproportionate restriction on the freedom to provide services,” he said.
Italian hotel association Federalberghi welcomed the decision, noting that it was a civil party in the case, and effectively accused Airbnb of evading its tax rights in Italy.
“Tax evasion and unfair competition harm both traditional tourism businesses and those that properly manage new forms of hospitality,” he said in a statement.
According to Federalberghi, Airbnb failed to retain and remit to domestic revenue about 1.5 billion euros ($1.6 billion) over a six-year period.
But an Airbnb spokesperson said the company was already supporting the correct payment of income tax for hosts by implementing the common tax reporting framework agreed by the EU.
“Airbnb does not have a tax representative to enforce withholding income tax in Italy, and the CJEU ruling makes it clear that any requirement to appoint one is contrary to EU law,” said said the spokesperson.
“We will continue to make progress on the EU’s bloc-wide approach to income tax reporting pending the final decision from the Italian court,” the Airbnb spokesperson said.
($1 = 0.9421 euros)
(Additional reporting by Alvise Armellini in Rome; Reporting by Jan Strupczewski; Editing by Emelia Sithole-Matarise)
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