Short-term rental company Airbnb must report rental contracts to tax authorities and withhold taxes in accordance with national law, the EU’s highest court ruled today, Reuters reports.
The decision came after Airbnb challenged a 2017 Italian law that requires the company and other similar companies to send information about their contracts to tax authorities, withhold 21 percent of their revenue and pay them to tax authorities.
Airbnb challenged the law in an Italian court, arguing that it contradicted the European principle of freedom to provide services within the EU. An Italian court subsequently appealed to the Court of Justice of the European Union, which ruled that Airbnb must pay taxes.
“European law does not exclude requirements for the collection of information or the withholding of tax in accordance with the national tax regime,” the EU court said in a statement.
“However, the obligation to appoint a tax representative is a disproportionate restriction on the freedom to provide services.”