The accommodation platform Airbnb has agreed to settle a tax dispute with Italian authorities by paying €576 million ($620 million; £496 million).

This amount pertains to income taxes that the company had not collected from individuals renting out rooms or properties on its short-term rental platform in Italy.

Landlords in the country are obligated to pay a 21% tax on their earnings. Airbnb has confirmed that it will not attempt to recover the unpaid taxes from its hosts.

Last month, an Italian judge ordered the seizure of €779.5 million from Airbnb's European headquarters in Ireland, alleging tax evasion for the years 2017-21. As part of the settlement, Airbnb will pay approximately three-quarters of the owed amount, addressing the tax liabilities of numerous landlords.

Italy, with popular tourist destinations such as Venice, Florence, and Rome, holds significance for Airbnb, and Italian authorities have been scrutinizing the tax practices of major companies operating in the country.

In 2022, Airbnb contested an Italian law requiring short-term rental providers to withhold 21% of rental income and remit it to tax authorities.

The company argued that this taxation law violated the EU's principle of freedom to provide services across its member states. However, the EU Court of Justice ruled that Airbnb must comply with the law.

Italian prosecutors revealed in November that Airbnb had neglected to collect taxes on nearly €3.7 billion ($4 billion; £3 billion) of rental income.

Despite Airbnb asserting that the majority of landlords are ordinary families seeking additional income, the company has committed not to recover the outstanding sum from its hosts.

Prime Minister Giorgia Meloni's government in Italy has been actively addressing tax evasion by short-term rental owners, planning to raise taxes from 21% to 26%.

The latest move is a victory for the government. It will also please some hotel owners, who argue that sites such as Airbnb have posed unfair competition.

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