Booking.com Enters Into $100 Million Tax Settlement With Italy

Travel website Booking.com has agreed to pay about 94 million euros ($100.25 million) to settle a tax dispute in Italy, Genoa prosecutors said on Friday.

The announcement marks another high-profile tax deal between multinationals and Italian authorities, who previously settled cases with luxury groups such as Kering and U.S. tech giants, including Apple, Amazon and Meta’s Facebook.

Booking.com welcomed the deal in a statement.

“While we maintain that we are and always have been in compliance with applicable Italian VAT laws, we can confirm that we have come to an amicable, mutual agreement with the Italian Revenue Agency relating to the period 2013 to 2021”.

Prosecutors in the northwestern Italian port city launched their investigation in 2018 into Booking.com, which is based in the Netherlands, over the way it handles taxation of properties rented out through its website.

Italy’s Guardia di Finanza tax police alleged in June 2021 that Booking.com evaded 153 million euros of value added tax (VAT) in connection with holiday rentals from 2013 to 2019.

Last November, Dutch magistrates accepted a European investigation order (OIE) sent by Italy allowing Italian prosecutors to question two former Booking.com chief financial officers as part of the investigation.

Subsequently prosecutors in Genoa extended their tax claims to include the year 2022. Friday’s settlement follows direct talks between the company and the Italian revenue agency.

Under the settlement Booking.com filed its VAT return in Italy for the year 2022, for a tax amounting to more than 19 million euros, and undertook to act as tax substitute for all transactions with private individuals not registered for VAT, according to the prosecutors’ statement.

Tax Collection

The probe concerned VAT in Italy on payments between private individuals for rental properties advertised by the online travel agent owned by the U.S. group Booking Holdings inc., based in Delaware.

Booking.com works as an intermediary between property owners and guests.

Private accommodation sites which are not professionally run often have no VAT number, and Italian tax authorities believe the online travel agency should in such cases act as a withholding agent, collecting tax.

The Italian tax police checked 896,500 property owners who worked with Booking.com and concluded it did not pay VAT due to Italy, saying they believe that failure to levy the tax allowed the business to undercut other hotel groups.

The company had said at the time that hotel and bed-and-breakfast owners were themselves responsible for collecting and paying the VAT they owed in Italy and other European Union countries.

In another similar case involving a company’s responsibility to collect tax on behalf of tax authorities, an Italian judge on Monday seized 780 million euros from short-term rentals platform Airbnb .

($1 = 0.9376 euros)

(Additional reporting by Toby Sterling in Amsterdam, editing by Alvise Armellini and Aurora Ellis)

This article was written by Emilio Parodi from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].