Italy’s tax police believe Booking.com evaded 153 million euros of value added tax (VAT) in connection with holiday rentals booked through its platform, two sources with knowledge of the matter reports.
The Genoa police said in a statement they “uncovered a massive tax evasion of more than 150 million euros in unpaid VAT from 2013 to 2019 by a multinational online travel agency based in the Netherlands”, without mentioning the company by name.
The police said their tax audit was conducted as part of a criminal investigation led by prosecutors in the northwestern coastal town.
The move comes days after an agreement by the Group of Seven rich countries’ to create a global minimum corporate tax rate of 15% to squeeze more money out of multinational web companies and reduce their incentive to shift profits to low-tax offshore havens.
The probe concerns VAT on payments between private individuals for rental properties advertised by the online travel agent based in The Netherlands and owned by the U.S. group Booking Holdings inc., based in Delaware.
Booking.com works as an intermediary between property owners and guests. Private accommodation sites which are not professionally run have no VAT number, and the online travel agency is supposed to operate as a withholding agent.
However the Genoa police, having checked 896,500 property owners who worked with the Dutch online giant, concluded it did not pay VAT due to Italy from 2013 to 2019, according to the two sources.
During this period, the commission collected by Booking.com in Italy from this type of private client amounted to 700 million euros, with unpaid VAT of 153 million euros, the sources said.
The Italian probe has attracted the attention of several European tourist destination countries, said one of the sources, with the tax authorities of these nations informally asking investigators for information on the matter.