Withholding tax obligation and data reporting for short-term rentals also for Airbnb

| Tax

The Court of Justice rejected Airbnb's appeal against some of the provisions contained in the Italian legislation on short-term rentals, pursuant to art. 4 of Legislative Decree 50/2017.

From 2023 Airbnb will apply the legislation on short-term rentals and will have to apply 21% withholding taxes on rental payments paid to owners who operate outside the corporate regime, as well as transmitting the data and information relating to intermediated short-term lease agreements.

“Short-term leases” are lease agreements for residential properties with a duration not exceeding 30 days. These include those which provide linen supply and room cleaning service, stipulated by natural persons, at the outside the exercise of business activities, directly or through subjects who carry out real estate brokerage activities, or subjects who manage telematic portals.

The obligations of intermediary short-term rental platforms

For this discipline, the legislator had established three obligations for intermediaries, two of which should come into force after the above-mentioned sentence of the European Court of Justice. In particular, has been confirmed:

  • the obligation to collect and communicate information to the tax authority relating to the lease agreements stipulated thanks to their intermediation activity
  • if they have taken part in the payment, the boligation to make a withholding tax of 21% on the intermediated sums as an advance or tax depending on the choice made by the lessees when filing the income tax return
  • regarding the third obligation, which provided for the appointment of a tax representative in the absence of a permanent establishment in Italy, the Court considered it to be a “disproportionate” measure with respect to the aim pursued of combating tax evasion since the control of compliance with the obligations imposed on the service providers concerned as taxable persons could be ensured by less harmful means.

 

We look forward to any clarifications from the competent authorities for any further updates.

In order to allow brokerage platforms to comply with the tax return regulations introduced by the EU and effective from 1 January 2023, we invite you to verify that you have correctly communicated all your tax information to them.