Airbnb Obliged to Provide Details to Tax Authorities, Says EU Court Adviser

Short-term lodging companies firm Airbnb is obliged to offer data in rental contracts to tax authorities, an adviser to Europe’s prime court docket mentioned on Thursday, in one other potential authorized setback in Europe for the corporate.

Airbnb has lately discovered itself at loggerheads with authorities in a number of European Union international locations, arguing that taxation and different necessities contravene the EU precept of the liberty to offer companies throughout the 27-country bloc.

The newest case includes a 2017 Italian regulation requiring Airbnb and different short-term rental websites to ahead data from their rental contracts and withhold 21% from the rental earnings and pay it to tax authorities.

The firm challenged the regulation in an Italian court docket which subsequently sought steering from the Luxembourg-based Court of Justice of the European Union (CJEU).

ECJ Advocate General Maciej Szpunar backed the Italian regulation. His opinion is non-binding however the ECJ normally follows 4 out of 5 such suggestions.

“Article 56 TFEU (Treaty on the Functioning of the European Union) in relation to the freedom to provide services does not preclude the obligation to collect and transmit information or to withhold tax,” Szpunar mentioned.

“It is perfectly consistent to impose the obligation to withhold tax on intermediaries involved in the payment of rent, given that the activity of a large number of natural persons who are not subject to the obligations incumbent on professionals is, by its nature, difficult to audit for tax purposes.”

He agreed with Airbnb’s argument in a single side.

“However, the obligation to appoint a tax representative constitutes a disproportionate restriction on the freedom to provide services,” Szpunar mentioned.

Airbnb mentioned: “Airbnb wants to be a good partner on tax and we support a consistent, standardised approach to information sharing, which is why we welcome the agreement by EU Member States on a common tax reporting framework for digital platforms, known as DAC 7.”

The CJEU will rule on the case in coming months. In April, the court docket rejected an identical problem by Airbnb to Belgian regional laws requiring it to offer data to tax authorities on vacationer transactions.

The case is C-83/21 Airbnb Ireland and Airbnb Payments UK.

© Thomson Reuters 2022