Since 2021, the Italian tax on property held abroad has been charged on the purchase price of homes in the United Kingdom, no longer on the value linked to Council Tax, and for many owners who are tax resident in Italy the annual bill has risen by tens of thousands of euros. A tax court in Como has now referred the question to the Court of Justice of the European Union. If the Court sides with the taxpayers, the consequences for many Italian owners of London property would not stop at future bills: the position of anyone who has already paid IVIE since 2021 could change too. For now, however, Europe has decided nothing.
If you are tax resident in Italy and own a home in London, this is a story worth following. And if you are about to buy one, it is too.
What happened, in two lines
Until 2020, a resident of Italy with a flat in London paid IVIE, the Italian tax on foreign real estate, on a value linked to the British Council Tax: a value based on 1991 bands, a long way from real prices in the London market.
Since 2021, with the United Kingdom’s definitive exit from the European Union, that same flat is taxed on its purchase price. The Italian rule itself has not been amended: with the end of the Brexit transition period, the United Kingdom simply ceased to qualify for the treatment reserved for EU and EEA states.
The result, for anyone who bought at £1 million, £2 million or £3 million, is an annual tax that may have increased many times over. The case that reached Como shows it clearly: a taxpayer resident in Italy, owner of a London home purchased in 2020 for £10.9 million, paid IVIE of €92,450 a year in 2021, 2022 and 2023, a total of €277,350, calculated on the purchase cost. He claimed a refund of the difference compared with the Council Tax criterion, the Italian Revenue Agency (Agenzia delle Entrate) refused, and the tax court suspended the proceedings to ask Europe whether the Italian rule is lawful.
The example: a £2 million flat
To get a sense of scale, take a flat purchased for £2,000,000. IVIE applies at 0.76% up to 2023 and at 1.06% from 2024.
| 2021, 2022, 2023 (0.76%) | 2024 and 2025 (1.06%) | |
|---|---|---|
| IVIE calculated on the purchase cost (rule in force today) | £15,200 a year | £21,200 a year |
| IVIE calculated on a hypothetical Council Tax base of £300,000 (illustrative value only) | £2,280 a year | £3,180 a year |
Over five years, the difference in this example exceeds £70,000. The £300,000 figure is not an applicable value and should not be read as one: it serves only to show the scale of the issue. In practice, the Council Tax linked base depends on the valuation band assigned to the property, and for properties in the top band, Band H, there is a specific complication: that band has no upper limit, so the “mid-band value” once indicated by the Italian Revenue Agency is not defined. What the difference would actually be worth for any individual owner is a reconstruction for a professional, not for this article.
Why the basis of calculation changed
The relevant provision is Article 19, paragraph 15, of Decree Law 201/2011, which sets out two different criteria depending on where the property is located. For property in European Union or European Economic Area states with an adequate exchange of information, the base is the “cadastral” value used in that state for wealth or income taxes. For property in all other countries, the base is the cost shown in the purchase deed or, failing that, the market value.
Until the 2020 tax year, the United Kingdom fell within the first group. The Italian Revenue Agency had identified Council Tax as the reference (Circular 28/E of 2012) and had clarified (Resolution 75/E of 2013) that, since there is no precise value but only a band, the mid-point of the band could be used. With the end of the Brexit transition period on 31 December 2020, the United Kingdom became a third country and, from 2021, UK property moved to the cost criterion. In 2024, for all property abroad, the rate rose from 0.76% to 1.06% (Law 213/2023).
What the Como tax court has asked Europe
With Order no. 74/1/26 of 3 July 2026, the Corte di Giustizia Tributaria di primo grado di Como (the first-tier tax court of Como) did not decide the case. It suspended the proceedings and referred the matter to the Court of Justice of the European Union, where it was registered on 13 August 2026 as Case C-923/26.
The question, in short, is whether Articles 63 and 65 of the Treaty on the Functioning of the European Union preclude a rule that calculates the tax on the cadastral value for property in EU and EEA states and on the purchase cost or market value for property in third countries, even where agreements are in force with that third country which allow the information needed to verify the taxable base, including the cadastral value, to be obtained on request.
In setting out its doubts, the Como court observes that a resident of Italy with a home in London is in the same position as someone with a home in Paris or Berlin: the tax targets the same indicator of wealth. It notes that Brexit changed neither the British Council Tax valuation system nor the property registers, and that until 2020 the Italian Revenue Agency itself considered that system adequate. And it recalls that instruments of tax cooperation remain in force between Italy and the United Kingdom: the EU-UK Trade and Cooperation Agreement, the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters (which Italy has expressly extended to IVIE) and the automatic exchange of financial data under the Common Reporting Standard.
Why Europe matters even though the UK is no longer in the EU
Article 63 of the Treaty does not stop at the Union’s borders: it prohibits restrictions on capital movements between a Member State and a third country as well, and buying a home abroad is, in the Court of Justice’s reading, a capital movement. That is why the United Kingdom, although outside the EU, remains within the scope of the rule.
Article 65 allows states to distinguish between taxpayers according to where they invest, but prohibits arbitrary discrimination and disguised restrictions. It will be for the Court of Justice to decide whether the Italian distinction is justified, for instance by the need for effective tax supervision, or not.
An interesting precedent: the Belgian case
In 2018, in Case C-110/17, the Court of Justice found against Belgium over a rule with the same structure: property in Belgium was taxed on a flat-rate cadastral value, property abroad on its actual rental value, which was systematically higher. The Court held that this made investing across borders less attractive and infringed the free movement of capital.
The Como court expressly cites this precedent as analogous. There are differences, however: the Belgian case concerned property in other EU Member States, not in a third country, and towards third countries the Court has historically allowed states a wider margin where no instruments for exchanging information exist. It is a precedent that strengthens the taxpayers’ case, not a guarantee of the outcome.
Paid IVIE since 2021? What a ruling could mean for you
Today the rule in force is the purchase cost criterion, and it must be applied.
The Como taxpayer argues that his London home should have continued to be assessed on a criterion comparable to the cadastral value used for Council Tax.
Should the Court strike down the post-Brexit treatment, the question would be far from academic for anyone who has paid IVIE since 2021: there could be a tax difference to recover, and in some cases a substantial one. How the tax would then be recalculated, and on what base, will depend on the content of the judgment and on how Italian law applies it: no one can say today that the old Council Tax criterion would automatically return.
Should the Court instead find the distinction justified, the current rules would be confirmed.
Why simply waiting may not be the best option
This is the practical point, and the reason we are writing about it now. The Italian Supreme Court, sitting in joint session, has set a general principle for income tax refunds, the rules to which IVIE refers: where a tax was paid under a rule later found incompatible with EU law, the time limit for claiming it back still runs from each payment, not from the judgment of the Court of Justice, and positions already closed by the passage of time are not reopened. For IVIE, precisely because its refund rules refer back to the income tax rules, that limit is generally taken to be 48 months from each individual payment.
For anyone paying IVIE on the purchase cost since 2021, this means a favourable judgment would not allow them simply to wait and then recover everything paid since 2021 indiscriminately. Some payments are already out of time, others may be before the European decision arrives, and each year stands on its own. Which payments are affected, which deadlines apply in a given case and whether a claim is worth filing are assessments to be made now, payment by payment, with your own accountant or tax adviser.
And if you are buying a home in London today?
For an Italian tax resident buying in London, IVIE is not a detail. Under the rules currently applicable to UK property, the taxable base is normally the cost shown in the purchase deed or, failing that, the market value, and the ordinary rate, currently 1.06%, is applied to that base, subject to the rules applicable to the individual position. Purely by way of illustration, on a £2 million property that means a tax in the region of £21,200 a year. It belongs in the return calculation of the investment from day one, alongside Stamp Duty, running costs and UK taxation.
The outcome of Case C-923/26 could become relevant for today’s buyers too, because it concerns how the tax is calculated for future years, not only the past. We promise no saving: no serious planning is built on a judgment that does not yet exist. But anyone investing today should know about this case, keep the purchase deed, completion statement and Council Tax documentation showing the assigned band carefully, and ask their adviser to follow developments.
What to do now
If you have paid IVIE on a UK property since 2021, retrieve your Italian tax returns and the F24 payment forms (the standard Italian tax payment form) relating to those payments, and ask your accountant or tax adviser to check, payment by payment, which amounts may still be within the time limit for a potential refund claim.
If you are buying in London today: ask your adviser to factor IVIE into the tax planning of the investment and to follow the progress of Case C-923/26.
Real Estate Xchange does not provide tax, legal or financial advice. This Market Insight is for information purposes only and summarises, in general terms, the legislation and developments described above on the basis of the sources indicated. It does not constitute an assessment of any reader’s tax position, nor a recommendation to file a refund claim. Any decision or action must be assessed with your own accountant or tax adviser. Readers who do not have a specialised professional may ask us for the names of independent advisers with experience in international taxation.
Do you own a London property or are you considering investing?
Real Estate Xchange assists Italian owners and investors in the London property market. If you are thinking of buying, selling or letting a property, or you need a Property Management service for a property you already own, we can help you assess the options and look after the property side in London.
For tax matters it is always necessary to consult your own accountant or tax adviser.
Sources and further reading
Official sources
- Court of Justice of the European Union, Case C-923/26, Agenzia delle Entrate (Direzione provinciale di Como), pending request for a preliminary ruling, lodged on 13 August 2026: official case page in the CURIA database
- Corte di Giustizia Tributaria di primo grado di Como (first-tier tax court of Como), Section I, Order no. 74/1/26 of 3 July 2026 (anonymised version lodged with the Court of Justice)
- Decree Law no. 201 of 6 December 2011 (Decreto-legge 201/2011), Article 19, paragraphs 13 to 17 (converted by Law 214/2011)
- Law no. 213 of 30 December 2023 (Legge 213/2023), Article 1, paragraph 91 (IVIE rate of 1.06% from 2024)
- Agenzia delle Entrate (Italian Revenue Agency), Circular no. 28/E of 2 July 2012
- Agenzia delle Entrate (Italian Revenue Agency), Resolution no. 75/E of 6 November 2013
- Treaty on the Functioning of the European Union, Articles 63, 64 and 65
- Court of Justice of the European Union, judgment of 12 April 2018, Case C-110/17, Commission v Belgium
- Presidential Decree no. 602 of 29 September 1973 (DPR 602/1973), Article 38
- Corte di Cassazione (Italian Supreme Court), Joint Sections, judgment no. 13676 of 16 June 2014
Authoritative editorial analysis
- D. A. Rossetti and A. Lops, “IVIE sugli immobili nel Regno Unito: alla Corte UE il criterio per la base imponibile post Brexit” (IVIE on UK property: the post-Brexit taxable base goes to the EU Court), Il Sole 24 Ore, NT+ Diritto, 14 September 2026 (in Italian)
