Short-term rental platform Airbnb has agreed to pay 576 million euros (£494.7 million) to settle a years-long dispute over unpaid taxes in Italy but said it will not try to recover the money from its hosts.

In November, Italian prosecutors said AirBnb owed about 779 million euros (£669 million) in short-term rental taxes it had failed to pay on behalf of Italian landlords who used the platform between 2017 and 2021.

The San Francisco-based company said in a statement on Wednesday that it was working on introducing new tools for hosts to have their taxes withheld automatically and paid to the Italian tax authorities on their behalf.

“The vast majority of hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income,” the company said in its statement.

“We hope the agreement with the Italian Revenue Agency and recent legislative changes will provide these families with certainty about the rules around hosting for years to come.”

The Court of Justice of the European Union ruled in 2022 that member countries could require short-term rental platforms to collect income taxes.

Airbnb said it welcomed clarity provided by the Italian government in next year’s budget law on how platforms should withhold income taxes for non-professional hosts in Italy.

“These improvements will make it easier for historic centres such as Venice and Florence to see who is hosting and how often, and to develop proportionate policy solutions in response. Airbnb is committed to working with Italian authorities to make the rules a success,” the company added.

Italy is a key market for Airbnb, with tens of thousands of hosts using the platform to rent their properties.

The far-right government led by Premier Giorgia Meloni has pledged to crack down on tax evasion related to short-term rentals and aims to raise the tax rate for owners from 21% to 26%.