Airbnb is facing the prospect of a tax bill worth hundreds of millions following an Italian court ruling in an evasion case.

Prosecutors in Milan say a judge authorised the seizure of €779.5m (£677m) from the short-term property rental platform.

They said it related to an alleged failure by the company to comply with laws that require Airbnb to pay Italian tax authorities 21% of landlords’ rental income in the country.

The requirement dates back to an EU Court of Justice ruling in 2017 that was unsuccessfully appealed by Airbnb early this year.

The money seizure order, which covers the years 2017-2021, targets Airbnb’s Ireland unit and also three individuals who held managerial roles at the company during that time frame.

AIrbnb was yet to comment.

It had fought the tax crackdown, which demanded Airbnb and rivals provide the authorities details of all its rental contracts in Italy, on the grounds it broke EU principles on the freedom to operate across the bloc.

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The news could be about to get worse for Airbnb as the government of PM Giorgia Meloni has revealed plans to raise the rental tax rate further, to 26%, on all short-term rentals.

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News of the tax demand came to light just a week after the company revealed record quarterly profits of $4.4bn – part-aided by a one-off income tax benefit related to its assets.

Group revenue of $3.4bn was 18% up on the same period last year.

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