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Executive Summary
On December 4, 2025, 26 jurisdictions (including the UK, France, Germany, and Italy) issued a Joint Statement declaring their intention to adopt the OECD's IPI MCAA (Multilateral Competent Authority Agreement on the Exchange of Readily Available Information on Immovable Property). This move marks a paradigm shift from an "Exchange on Request" regime to an Automatic Exchange of Information (AEOI) regime regarding real estate assets.
This memorandum reviews the new mechanism, the expected timelines, and the legal and tax implications for individuals and trusts holding real estate outside their country of residence.
1. The Normative Background: Closing the Regulatory Gap
Over the last decade, the fight against black capital has focused primarily on financial assets through the implementation of the CRS (Common Reporting Standard). While the banking system has become almost completely transparent to tax authorities, real estate assets (Non-Financial Assets) remained under an outdated reporting regime based on "Exchange on Request" (EOIR). This created an incentive for capital diversion from financial assets to real estate (Asset Substitution).
The current statement constitutes the operational phase of the process initiated by the OECD's report to the G20 in July 2023 (Enhancing International Tax Transparency on Real Estate), aiming to create global standardization in real estate reporting.
2. The New Mechanism: From "On Request" to "Readily Available"
The IPI MCAA is based on the principle of exchanging Readily Available Information. This means countries will automatically transfer information existing in government databases (land registries and tax authorities) without the need for a specific request or prior reasonable suspicion.
The mechanism operates through two modules that countries can sign up for:
- Ownership/Holdings Module: Reporting on the existing stock of assets and on new acquisitions.
- Income Module: Reporting on recurrent income (rental) and capital events (disposals/capital gains).
3. Substantive Issues and Risk Analysis
An analysis of the technical Framework documents (October 2025) reveals several critical points requiring preparation by taxpayers:
A. Retroactive Application ("The Stock Take")
Unlike many tax agreements that apply prospectively (Grandfathering), the IPI mechanism includes an explicit provision for a one-off exchange of information on the existing stock of real estate holdings.
- Legal Implication: Upon the agreement's entry into force (expected by 2029-2030), information regarding assets acquired in the past will be transferred, even if purchased a decade or more ago. There is no "statute of limitations" on the ownership itself.
B. Cross-Referencing with DPI (Digital Platforms Reporting Rules)
The IPI does not operate in a vacuum but complements the DPI (Digital Platforms Initiative) rules already implemented in many countries (such as DAC7 in the EU).
- Implication: Tax authorities will possess the capability to cross-reference two independent information sources:
- Income reports from digital platforms (Airbnb/Booking).
- Asset reports from land registries.
- Risk: Discrepancies between reports (e.g., reporting income without a registered asset in the taxpayer's file) are expected to trigger automatic audit proceedings.
C. Identification Challenges and Matching Algorithms
The OECD acknowledges that many land registries do not include the owner's Tax Identification Number (TIN), but only basic details (name and address). Consequently, tax authorities are expected to use probabilistic matching algorithms (Fuzzy Matching) to link assets to taxpayers.
- Risk: Exposure to erroneous tax audits based on identification errors ("False Positives"), shifting the burden of proof to the taxpayer to refute ownership.
D. The Gap Between Legal and Beneficial Ownership (UBO)
At this stage, the information transferred is based on existing registration ("As Is"), which typically reflects the Legal Owner and not necessarily the Ultimate Beneficial Owner (UBO). However, the regulatory trend (such as the BORIS project in Europe) is towards linking and synchronizing land registries with UBO registers, which will eventually lead to full transparency even for holding structures via legal entities.
