According to the Italian authorities, the online booking platform didn’t pay 153 million euros of valued-added tax between 2013 and 2019.
The issue has been discovered with an investigation from la Guardia di Finanza, a militarized police force part of the Italian Ministry of Economy and Finance. The agency deals with financial crime and smuggling. It targeted an “established company with headquarters in the Netherlands” and revealed a “massive VAT tax evasion of more than 150 million euros between 2013 and 2019” according to the financial watchdog statement. Ansa, the Italian news agency, relayed the news as being Booking.com, whose headquarters are based in Amsterdam.
The investigation started in 2018 when it controlled tax declarations from managers of “Bed & Breakfast” accommodations in the touristic areas of the province of Genoa in Liguria.
Booking issued invoices without added-value tax
It appeared that the Dutch company was used to issuing invoices without VAT, a tax that the supplier is supposed to collect to the client.
Issuing invoices without VAT is a possibility though, like with a business-to-business transaction between different countries in which different VAT rates apply. It is the reverse charge mechanism. Clients would be deal with their local VAT schemes. Except that it cannot apply when clients are exempt of collecting the VAT because the clients aren’t redistributing the tax to the State.
So, Booking had to take care of the VAT. However, Booking didn’t declare the tax it was supposed to pay, neither was it registered in Italy nor did it name a proper tax representative as required. As a consequence, the value-added tax was not paid in Italy nor in the Netherlands, which, according to the Guardia di Finanza, makes it a “crime of omitted declaration“.
In the Netherlands, Booking.com recently faced controversy as it offered bonus checks to three company leaders for a total of 28 million euros. The problem was that the company had received 65 million euros of government aid as the travel industry is heavily impacted by the pandemic. The company declared it would reimburse the aid received by the Dutch government.
Media sources and useful links:
- Scoperta maxi evasione fiscale di un gigante del web, Guardia di Finanza, June 2021, Free access