Real estate, global database on home ownership and rentals arrives

The automatic exchange of tax information extends to real estate assets. This is the objective that 25 countries have set themselves in order to exchange data on taxpayers who own houses or collect rents, even short ones, outside their State of residence. The joint declaration was signed on 4 December and involves 24 other countries in addition to Italy: Belgium, Brazil, Chile, Costa Rica, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Korea, Lithuania, Malta, New Zealand, Norway, Peru, Portugal, Romania, Slovenia, South Africa, Spain, Sweden and the United Kingdom and Gibraltar.

The strategy, explains a note published on the website of the Ministry of Economy and Finance, is the one that has already been adopted in recent years and that has led to the development of tax policy by improving 'significantly the cross-border exchange of information and cooperation between tax administrations, combating offshore tax evasion and the secrecy of financial accounts'. In essence, the footprint to be followed is the one that allowed the introduction of the automatic exchange of information on financial assets (Common Reporting Standard) and crypto-assets (Crypto-Asset Reporting Framework). The hole that now needs to be filled to combat fraud and tax avoidance is in the mechanism for exchanging information on non-financial assets, particularly real estate.

The jurisdictions that have now signed the Statement of Intent aim to get the new information exchange mechanism off the ground by 2029 or 2030, depending on national procedures, with the idea of encouraging "other jurisdictions to join the initiative to promote transparency, fairness and efficiency in global taxation". The new multilateral agreement between competent authorities on the automatic exchange of readily available information on real estate called International Property Information Multilateral Competent Authority Agreement (Ipi Mcaa) is the one already developed by the OECD. And as underlined by the MEF, 'its wide adoption represents an important step towards greater fiscal transparency on non-financial assets', strengthening 'the ability to monitor and enforce tax compliance, combating evasion that reduces public revenues and unfairly burdens honest taxpayers'.

The Italian tax administration is already able to use data on the real estate owned by Italian taxpayers. And it does so by cross-referencing the data from abroad with the data indicated by taxpayers in their income tax return in the RW panel filled in precisely for tax monitoring purposes. Moreover, the taxpayer resident in Italy who owns a property across the border is obliged to pay the Ivie (Tax on the value of foreign property) and if this does not happen or the property is not present in the RW panel, the Revenue Agency may proceed with a compliance action, sending the classic alerts to allow the taxpayer to clarify his position, or on the contrary with an assessment. Penalties in the event of a dispute by the Inland Revenue may reach up to 25 per cent of the value of the undeclared property.