Airbnb to Pay €576 Million to Settle Italian Tax Claim

Thomas Seal and Natalie Lung, Bloomberg News

A narrow winding cobbled residential street in Castelbuono, Italy, on Monday, May 17, 2021. Some new arrivals are remaking villages so that they are more viable places to live long-term. , Bloomberg

(Bloomberg) -- Airbnb Inc.’s Irish unit agreed to pay Italian authorities €576 million ($621 million) to settle allegations that it hadn’t paid enough tax.

The San Francisco-based home-sharing company doesn’t acknowledge “any liability” as part of the settlement, it said in a regulatory filing on Wednesday.

Italy’s finance police had claimed that the company failed to pay taxes on about €3.7 billion ($4 billion) of hosts’ rental revenue and claimed that the company owed about €779 million after an audit of the tax years from 2017 to 2021.

Airbnb is still in discussions about its taxes for 2022 and 2023, and the amounts involved may be “material,” the company said in a statement.

The settlement, lower than the amount Italian authorities had initially pursued, is equivalent to about a third of the company’s quarterly adjusted earnings. Shares of Airbnb rose as much as 3.1% at market open in New York before paring gains; the stock was unchanged at 11:35 a.m.

Italian authorities are ramping up scrutiny of how global companies operating in Italy pay tax. In 2019, Italian prosecutors probed Netflix Inc. after the US streaming company failed to file a return, people familiar with the matter said at that time. Earlier this year, Milan prosecutors started investigating Facebook parent company Meta Platforms Inc. for alleged unpaid value-added taxes that totaled about €870 million, people familiar with the matter told Bloomberg last February.

A spokesman for Italy’s tax agency declined to comment.

--With assistance from Daniele Lepido.

(Updates with additional details from third paragraph, shares in fourth paragraph)