A legal victory for platforms including Airbnb, Expedia, Vacation Rentals in Europe, puts a brake on unilateral changes that Member States are trying to promote in their legislation.
A Member State cannot impose additional obligations on an online service provider established in another Member State.
This is the (final) decision of the Court of Justice of the European Union, vindicating online service platforms in their months-long legal battle against Italian laws and representing a signigicant legal victory for platforms.
In Italy, providers of online intermediation services as well as search or booking engines such as Airbnb, Expedia, Google, Amazon and Vacation Rentals, are subject to certain obligations under national provisions.
These obligations were adopted in 2020 and 2021, with the aim of ensuring appropriate and effective implementation of the regulation to promote fairness and transparency for business users of online intermediation services.
Providers of these services must, amongst other things, be registered in a register maintained by an administrative authority (AGCOM), periodically send financial records, provide detailed information, and pay a financial contribution. Penalties are enforced in the case of non-compliance with these obligations.
The Italian authorities wanted the platforms to pay the contributions even if their company’s registered office was outside their economic jurisdiction.
Airbnb and Google (whose European headquarters are in Ireland), Vacation Rentals Ireland Ltd, Expedia (European headquarters in Spain) and Amazon (European headquarters in Luxembourg) challenged the law in an Italian court before the case was subsequently referred to the European Court of Justice – the European Union’s highest court in matters of Union law.
The platforms argued that the law was contrary to EU law which states that internet service providers are only subject to the rules of the country in which they are established.
What the Court of Justice of the European Union decided
On Thursday 30th May in Luxembourg at the final judgment in the Court of Justice, the judges ruled in favour of the platorms, saying that “a Member State cannot impose additional obligations on an internet service provider established in another Member State”. The ruling underlines that the Italian legislation violates EU market rules on e-commerce and awarded legal victory to the platforms.
According to the Court, these obligations do not fall within the exceptions allowed by the E-Commerce Directive.
The EU court issued an initial opinion in favour of internet service providers in January. Now the courts legal victory for platforms Airbnb, Expedia, Vacation Rentals, etc. is final. The ruling issued on Thursday 30th May cannot be appealed.
In December 2023 Airbnb agreed to pay €576 million ($621) to the tax authorities in Italy as part of an investigation into alleged tax evasion. Italian prosecutors alleged that the company had failed to collect the required 21% of owners’ rental income and pay it to the Italian tax authorities. The amount due is said to have amounted to around €3.7 billion,
Three individuals who served in management roles at Airbnb between 2017 and 2021, the period in which the breach allegedly took place, were also placed under investigation.
A judge in Milan initially ordered the seizure of €779.5 million ($831,6) from Airbnb’s headquarters in Ireland, but Airbnb settled the dispute with the Agenzia delle Entrate (the Italian tax authority) a month later for a lower amount than previously expected.
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