First Group of Jurisdictions Confirms Its Participation in the OECD’s International Tax Transparency Framework for Immovable Property

On December 4, a first group of 26 jurisdictions issued a joint statement to express their support for the new framework for international tax transparency for non-financial assets, in particular, real estate, and their intent to join the Multilateral Competent Authority Agreement on Automatic Exchange of Readily Available Information on Immovable Property (IPI MCAA) by 2029-2030.

The OECD had developed this voluntary framework to regulate automatic exchange of information, allowing tax administrations to more efficiently observe cross-border ownership, acquisitions, disposals and income generated from immovable property, as well as improve tax compliance in this area.

Key features of the framework:

1) Readily available information. The IPI MCAA seeks to enhance tax transparency among interested jurisdictions on a voluntary basis on immovable property on the basis of information that is readily available to competent authorities regarding holdings, acquisitions and disposals of immovable property, as well as recurrent income derived from immovable property. The corresponding information is electronically captured, searchable and sortable, and is limited to the current data only.

2) Choice of an approach to receiving immovable property information. Exchanges under the IPI MCAA stipulate for the use of two modules, depending on the approach more convenient for the jurisdiction interested in receiving the information. The first module focuses on gaining visibility of the holdings and acquisitions of immovable property abroad by taxpayers firstly through one-off exchange at the time when jurisdictions activate a bilateral exchange relationship under the IPI MCAA, and then through annual updates. The second module entails the annual automatic exchange of information on disposals of immovable property, as well as on income derived from immovable property.

3) Reciprocity. Annual exchanges between jurisdictions will take place on an “as is” basis, covering information on immovable property transactions, holdings and income that is available to competent authorities at the moment. In practice, the scope of information that is sent by a participating jurisdiction, as well as the scope of information that a jurisdiction is interested in receiving, may vary for different combinations of bilateral relationships, depending on the volume of available information.

4) Deadlines. The one-off exchange on pre-existing holdings of immovable property should take place by January 31 of the year following the year in which the IPI MCAA came into effect between two Competent Authorities. Annual automatic exchanges on acquisitions, disposals and recurrent income derived from immovable property should be completed by June 30.

Joint Statement on Collective Engagement to Exchange Readily Available Information on Immovable Property  https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/tax-transparency-and-international-co-operation/joint-statement-ipi-mcaa.pdf

Framework for the Automatic Exchange of Readily Available Information on Immovable Property for Tax Purposes  https://www.oecd.org/en/topics/sub-issues/international-tax-compliance-policies-and-best-practices.html