Can renting your apartment on AIRBNB be considered as an entrepreneurial activity? The new clarifications from the Italian Revenue Agency

With a turnover of almost EUR 5.4 billion (source: la Repubblica Newspaper) AIRBNB dominates the market for short-term rentals in Italy and is a very popular alternative to hotel reservations. Many landlords refer to this platform to rent their home independently, without having to rely on expensive agencies, and with considerable possibilities of profit.

In order to control the volume of business generated by tourist rentals and to avoid forms of tax evasion, the legislator, with Law Decree No. 50/2017, introduced the so-called “AIRBNB tax”, which provides for the application of a 21% withholding tax on short-term rental leases, retained by intermediaries (such as AIRBNB) at the time of booking and then paid by them directly to the Revenue Agency.

In particular, this scheme shall apply to all short term leases for residential use entered into by private persons for a period not exceeding 30 days, including those providing cleaning and linen services.

The application of this substitute tax is only possible when the activity does not have an entrepreneurial nature: in the latter case, in fact, it would be necessary to comply with a number of administrative steps, such as the application request for a special license (suap communication); a VAT number request; the registrations at the Chamber of Commerce and INPS (National Institute for Social Security).

At present, however, the implementation rules of the said Law Decree, which should have stated “the criteria on the basis of which the lease activity is presumed to be performed in an entrepreneurial form”, also in terms of the number of houses rented or the duration of the leases on an annual basis, have not yet been approved.

In light of this lack of regulation, the Revenue Agency had already clarified in its Circular No. 24/E/2017 that the regulation of short leases cannot be applied if additional services are provided, which do not have an inseparable connection with residential purposes of the property such as, for example, breakfast; meals; car rental, tour guides and/or interpretation service.

In its reply to the Enquiry No. 373 dated 10 September 2019, the Revenue Agency pointed out that “lacking the implementing regulations, in order to define the appropriate criteria which shall be met to consider a particular rental activity as having an entrepreneurial nature, reference should be made to the general principles established by art. 2082 of the Civil Code and by art. 55 of the Presidential Decree 22 December 1986, No. 917 (with reference to the pursuit of commercial activities)”.

In light of the above considerations, the Revenue Agency concluded in its reply that, on the basis of the information provided by the applicant, who is interested in renting an apartment for short periods to tourists through the online portal AIRBNB, the requirements that would allow the natural person to carry out the activity of renting within the framework of a business activity are not met.

Lacking the supply of ancillary services, not directly related to the residential purpose of the property, will therefore provide that leasing an apartment will be excluded for short term periods, as well as through intermediaries such as AIRBNB, which is sufficient to qualify the lessee as an “entrepreneur”.