“Land-rich clause” recently introduced in Italy – Impact on non-resident investors

14 April 2023

Article 1 of the Law no. 197 of 29 December 2022 (the “2023 Italian Budget Law”), in force since 1 January 2023, has recently introduced some important changes regarding the taxation of indirect transfers (through the transfer of participation) of Italian immovable property, in line with the provisions of Article 9(4) of the MLI.


In Italy, non-resident individuals and non-resident companies without a permanent establishment in Italy, are taxed separately on any Italian source of income.

Income and capital gains from immovable property are generally taxable in Italy if the property is located in Italy, with some exceptions related to capital gains realized after a minimum period of possession of the immovable property.

Capital gains realized on the disposal of participations in Italian resident entities are generally taxed through a substitute tax of 26%. However, there is no taxation in Italy for disposals of listed companies or if the transferor is a resident in a State which allows an adequate exchange of information with Italy.

The introduction of the “land-rich clause”

In this context, the 2023 Italian Budget Law has substantially transposed Article 9(4) of the MLI into the Italian legislation, by introducing some important changes to article 23 of the D.p.r. no. 917/86 (“the Italian Tax Code”) and to article 5 of the D.Lgs no. 461/97. According to the new provisions, capital gains derived by non-resident individuals and entities from the sale of participations in non-resident companies and entities are taxable in Italy if, at any time during the 365 days preceding the alienation, these shareholdings derived more than 50 per cent of their value directly or indirectly from immovable property located in Italy.

The impact of the new legislation for non-Italian-resident investors (individuals and entities)

The new legislation has an immediate impact on investors residing in countries with double tax treaties that already include a “land-rich clause” in line with Article 9(4) of the MLI. Moreover, this provision has a direct impact also for foreign investors residing in countries without a double tax treaty with Italy or that are not protected by an existing tax treaty. Furthermore, this provision will have an even greater impact once the MLI is ratified by Italy, except for those countries which opted-out entirely from this MLI provision, by reserving the right for the whole of Article 9 not to apply.

From 2023 onwards, non-Italian-resident operators have to be very careful when evaluating cross-border operations involving entities that directly or indirectly own real estate properties in Italy. At ECOVIS STLex, we are at your disposal to assist you in evaluating the possible fiscal impact in Italy of the transfer of assets located in Italy.

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