The European Union's top court seemingly doesn't buy the argument that Airbnb is merely a marketplace. Hence, Airbnb will have to withhold and remit occupancy tax in Europe.
Short-term accommodation services company Airbnb must provide information in rental contracts to tax authorities and withhold tax under a national tax regime, the European Union’s top court ruled on Thursday.
The ruling comes in response to a challenge from Airbnb to an Italian law from 2017 requiring Airbnb and other short-term rental sites to forward information from their rental contracts to tax authorities and to withhold 21% from the rental income and pay it to tax authorities.
The company challenged the law in an Italian court, arguing that taxation and other requirements contravene the EU principle of the freedom to provide services across the 27-country bloc.
The Italian court subsequently sought guidance from the Court of Justice of the European Union.
“EU law does not preclude the requirement 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,” it said.
(Reporting by Jan Strupczewski; Editing by Emelia Sithole-Matarise)
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Photo credit: The interior of an Airbnb property in Italy. A European ruling mandating that Airbnb share rental information with authorities grew out of an earlier Italian court decision. Fattoria la Maliosa / Flickr