What are the real flaws of Airbnb? Debate between tax experts

19 November 20236 months ago babelfish

Is Airbnb indebted to the tax authorities and Italian taxpayers or not? The debate is open between tax and tax experts

Is the huge seizure of 779 million euros from AirBnb accounts just a soap bubble or is it the lèse majesté of national tax rules?

The debate is also open among tax experts and Italian and European tax experts. First of all, let's try to understand how the rules work which, according to the findings of the judges of the Milan Prosecutor's Office, the US hospitality giant has introduced.

WHAT DOES THE 2017 REGULATION ON DRY COUPONS PROVIDE

In 2017 the legislative decree n. 50 of 2017 introduced the flat rate tax rate of 21% for short-term rentals. Not only that, the law also established that for subjects who carry out real estate brokerage activities or who manage online portals which, like Airbnb, put tenants and landlords in contact, by putting hosts in contact, there is an obligation to report to the administration finances the contracts stipulated and to make a withholding tax upon remittance of the sums to the lessor and to pay it to the treasury. The intermediaries were thus burdened with the burden of "tax substitution".

Things change, however, if the intermediary is a non-resident individual without a permanent establishment. In this case he must appoint a tax representative in Italy to fulfill the obligation, not as "substitutes" but as "tax managers", a tax representative in Italy.

AIRBNB'S WAR ON THE DRY TAX RULE

Here, Airbnb has always opposed this rule, considering Legislative Decree 50/2017 to be in conflict with some community rules and principles (Article 56 of the TFEU), including that of the freedom to provide services. Giuseppe Litturi , on Startmag , explains in depth the judicial process that followed Airbnb which first appealed to the TAR against Legislative Decree 50 of 2017, not obtaining a favorable ruling, then to the Council of State which appealed to the Court of Justice ( CJEU) which issued a ruling in December 2022 with which “the Luxembourg judges declared that the national rule does not conflict with Article 56 of the TFEU when it asks to transmit information (first obligation) nor when it asks to perform the withholding tax (second obligation)”.

THE RULE ON THE TAX REPRESENTATIVE: “EXCESSIVE AND NOT PROPORTIONATE”

The only issue on which the CJEU ruled in favor of Airbnb is the third obligation, that of appointing a tax representative for non-resident and non-established subjects. The European judges deemed it excessive and not proportionate. This aspect, however, does not invalidate the entire rule, as Airbnb had requested. “On this point, the Italian panel has released the brake constituted by the necessary sharing of the conclusions of the CGEU and has let itself go – writes Litturi again -: “ the thesis, although suggestively argued, is not convincing ”, is the almost mocking verbal arabesque with which reject the appellants' arguments. In fact, the tax representative is only "an addition", an indicated way to carry out the fulfillment".

ITALIAN TAX SOVEREIGNTY ALSO APPLIES TO AIRBNB

The withholding obligation remains valid even for the non-resident intermediary without a permanent establishment. Therefore, the rule does not stop working. And Airbnb's complaints are baseless. “If the State places an obligation on Airbnb and the latter decides to autonomously interpret the law and shield itself from unlikely European regulations, making a mockery of what little fiscal sovereignty we still have, the damage is already there. Regardless of everything else. Indeed, the damage is precisely that, even before the shortfall in the state coffers – writes Litturi -. We still decide how taxes are collected and you adapt, replied the magistrates of the Council of State".

THE LEGISLATIVE “MESS” ACCORDING TO PROF. DARIO STEVANATO

On this point, as mentioned, there is no unanimous opinion among experts. The professor. Dario Stevanato , professor of tax law at the University of Trieste, on the Foglio , questions what the crime committed by Airbnb is. “It is not clear how an amount that Airbnb did not keep for itself but paid entirely to the hosts, i.e. to the landlords who were clients of the platform, could be considered “profit from the crime” – writes Stevanato recalling the seizure of 779 million euros -. First of all, as mentioned, it is not clear where the crime lies." According to prof. Stevanato we are faced with a real legislative "mess".

The motivations, at times, would be of an ideological nature. “In order to forcibly impose an obligation to make withholding taxes, foreign subjects have been given the qualification of “tax payers” even in the face of obligations that essentially appear to be “tax substitution” – writes Stevanato -. And this is in continuity with the legislative choices of recent years, such as the various web or digital taxes, which denote intolerance towards large multinationals (especially American) which, without fixed bases in Italy, can operate here without corresponding, completely legitimately in based on current laws, income taxes".

But not only that, in his examination the prof. Stevanato disputes that Airbnb "illegitimately withheld the amount of withholding taxes" because the rental payments were entirely paid to the landlords (net of the commission due to Airbnb). “There is no illicit profit to be recovered from Airbnb, which has not appropriated anything, and the initiative of the Milan prosecutor's office, endorsed by the investigating judge, appears reckless to say the least,” the professor finally writes. Stevanato.

EUTEKNE: AIRBNB DID NOT PAY THE DRY TAX BUT WAS NOT REQUIRED TO DO SO

The issue was examined by a document released by the Eutekne Study Center . “AirBnB – we read in the document – has failed to operate a withholding tax on rental payments paid to individuals who rented apartments for less than 30 days”. Eutekne underlines that the "dry coupon or personal income tax" would not be "due by AirBnB, but by the owners". Therefore, if it is true that the platform has never paid the flat rate tax, "it does not necessarily mean that this corresponds to equal tax evasion, unless we want to assume that none of the lessors involved have paid the taxes on the properties rented with lease brief".

However, the opposite also remains true, that is, some of the owners did not pay the tax either through Airbnb or even directly. From 2017 to 2021, according to what emerged from the investigations of the Guardia di Finanza, 3.7 billion euros were paid to the owners of the structures.

THE GOOD FAITH OF AIRBNB

Prof. has no doubts about Airbnb's good faith. Raffaello Lupi , professor of tax law at the University of Tor Vergata. A multinational like Airbnb would not have "defrauded the tax authorities" voluntarily but "considering themselves non-residents, they did not do so at all. They even made an appeal to the court of justice which was very wrong, because the principle of effectiveness was violated, not European freedoms." No hypothesis of fraud would hang over the heads of Airbnb managers. “Fraud lies only in evasion by concealment – writes the professor. Wolves on Twitter -. If anything, Airbnb has avoided a requirement which, for non-residents, is illegitimate due to lack of effectiveness. A foreigner cannot be forced to make reports or withholdings just because he has the portal."

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia-on-demand/quali-sono-le-vere-magagne-di-airbnb-dibattito-tra-fiscalisti/ on Sun, 19 Nov 2023 06:07:09 +0000.