Italy investigating Booking.com for alleged VAT evasion

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Italy investigating Booking.com for alleged VAT evasion

'' Italy's tax authorities believe Booking.com have evaded 153 million euros value added tax in connection with holiday rentals found on its platform, two sources with knowledge of the matter told Reuters on Thursday.

The Police of Genoa said in a statement that they discovered from 2013 to 2019, from a multinational online travel agency based in the Netherlands with more than 150 million euros in unpaid VAT, 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 city.

A spokesperson for Booking.com in the Netherlands said he had no immediate comment.

The move comes days after an agreement by the Group of Seven rich countries to create a 15% minimum corporate tax rate in order to squeeze more money out from offshore web companies and cut their incentive for shifting profits to low-tax offshore havens.

Colonel Ivan Bixio, head of the Genoa police group that led the investigation, told Reuters that this type of evasion they had uncovered generates huge profits to the beneficiaries, damages public budgets and alters the regulations of competition.

The investigation concerns VAT from parties for renting properties that are advertised by an online travel agent based in Delaware and owned by the U.S. group Booking Holdings Inc. based in The Netherlands.

Booking.com works as an intermediary between property owners and their guests. Private websites that are not registered as a VAT have no VAT number, and the online travel agency is supposed to operate as a withholding agent.

However, according to the two sources, the Genoa police, having investigated 896,500 property owners who worked with the Dutch online giant, concluded that it did not pay the holiday due to Italy from 2013 to 2019.

The commission of Booking.com in Italy from this type of private client amounted to 700 million euros, with collected VAT of 153 million euros, the sources said.

The Italian inquiry has attracted the attention of several European destinations for tourists, said one of the sources, with the tax authorities of these nations informally asking investigators for information on the matter.

He did not identify this countries.

As the investigation proceeds to Italy, Italy's tax office will launch a separate procedure at the end of which Booking.com will have to decide if they agree to pay or contest any allegations of wrongdoing.

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