By Foo Yun Chee
BRUSSELS (Reuters) – Airbnb is required to provide information on rental contracts to tax authorities, an adviser to Europe’s top court said on Thursday, in another possible legal setback in the region for the vacation rental company.
In recent years, Airbnb has clashed with authorities in several European countries, arguing that the taxation and other requirements violate the European Union’s principle of freedom to provide services across the 27-country bloc.
The most recent case involves a 2017 Italian law that requires Airbnb and other short-term rental sites to forward information from their contracts, as well as withhold 21% of rental income and pay the amount to tax authorities.
The company challenged the law in an Italian court that later sought guidance from the Court of Justice of the European Union (CJEU).
CJEU Advocate General Maciej Szpunar supported the Italian law. His opinion is not binding, but the European court generally follows four out of five such recommendations.
“Article 56 of the Treaty on the Functioning of the European Union in relation to the freedom to provide services does not exclude the obligation to collect and transmit information or to withhold tax”, he said.
“It is perfectly coherent to impose a withholding obligation on intermediaries involved in the payment of rents, since 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 one respect.
“However, the obligation to appoint a tax representative constitutes a disproportionate restriction on the freedom to provide services,” Szpunar said.
The CJEU will decide on the case in the coming months. In April, the court rejected a similar challenge by Airbnb to a Belgian regional law that requires the company to provide information about tourist transactions to tax authorities.
(By Foo Yun Chee)
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