Foreign property buyers in Italy. The Australian experience.

Before deciding to buy a property abroad or to invest in a foreign partnership or company, one essential question requires very careful consideration. What needs to be thoroughly checked is in fact the occurrence of any particular circumstances that may affect the validity of the contract, such as whether or not the party entering into the agreement may be considered incapacitated because of the lack of the so-called condition of reciprocity.

Under the terms of article 16 of the Dispositions about Law in general introducing the Italian Civil Code, except in those cases provided for under specific legislation, a foreign national is allowed to enjoy the same civil rights due to an Italian citizen on condition of reciprocity. This rule is applicable also to legal entities, so it should always be verified for foreign companies, partnerships, clubs and societies.

In order to promote the interests and rights of Italian citizens abroad, the law establishes a quid pro quo principle of limiting a foreigner’s civil rights in Italy so that he/she is entitled to enjoy some of these rights in our country only if the national law of his/her country allows an Italian citizen to enjoy the same rights there.

First of all, it should be noted that under the terms of Italian law, citizens of any member state of the European Union are considered equal to Italian citizens and are no longer considered as “foreigners”; likewise, there is no need to establish whether the condition of reciprocity exists when the parties to transactions are: stateless persons or refugees who have been resident in Italy for at least three years; citizens of the EEA (i.e. Liechtenstein, Iceland and Norway); extra–EU citizens sojourning in the Italian territory and holding a residence card or a regular permit to stay issued for the purposes of gaining employment or self-employment, managing an individual concern, for family, study and humanitarian reasons. On the contrary, the condition of reciprocity should always be checked in the case of foreigners not living in Italy or not staying regularly in Italy and for those who do not have a residence permit or card, either because they never applied for it or it was denied.

Moreover, as soon as they arrive at the Italian frontier or stay in any part of the Italian territory, all foreigners are assured inviolable rights such as the right to health, to own private property and any fundamental human right acknowledged by national laws, international agreements in force and international law in general.

According to the constant and most acknowledged opinion, verification of reciprocity is not required in the presence of citizens of those countries with which Italy has entered into Bilateral Investment Treaties, or BITs, where an investment represents, independently of the adopted legal form or of the legal system of reference, any asset, such as rights of ownership on immovable and movable assets, company shares, monetary credits or copyright or industrial property, invested by one party through a contract in the territory of the other party, in conformity with the national laws and the regulations of the latter. In this case, in fact, the Treaty ratification and enforcement legislation is special with regard to the general provision as per article 16 and the reciprocity condition is to be considered as satisfied in relation to the matters disciplined by the Treaty.

The Italian Ministry of Foreign Affairs’ website ( provides a list of the countries with which Italy has entered into agreements for the promotion and protection of investments together with a case study of their implementation and a very interesting wealth of information about the current situation of reciprocity conditions in relation to each foreign state in the matter of property purchase, including mortgages, and investments in Italian partnerships or companies.

While we see that the condition of reciprocity is fully satisfied in relation to the United States of America, Japan and the People’s Republic of China, the purchase of dwellings in Switzerland by non-resident people is subject to authorization by the competent cantonal authority and concerns only holiday homes and plots of land not exceeding certain specific surface areas. At present with Brazil reciprocity exists but not for the purchase of rural houses, while in Thailand immoveable properties can be bought only if they are part of a condo and the maximum share of 40% reserved to foreigners is not exceeded. No reciprocity exists with several countries, e.g. Myanmar, and with some others the condition of reciprocity may still be under verification.

The Australian experience

A very peculiar case is the Australian situation. The matter is disciplined by a bilateral treaty called “Migration and Settlement Agreement” signed in Canberra on 26th September, 1967. This treaty is still in force and allows for full reciprocity between the two countries. On several occasions it appeared as if the reciprocity agreement was suspended, above all because of some parts of Australian legislation aimed at limiting the purchase of immoveable assets by foreign – especially Asian – investors, but both in 2005 and again more recently the National Board of Italian Notaries and the ministerial authorities of both countries confirmed the applicability of the quoted Agreement and specifically its article 28; some limitations still remain valid, however, mainly for Italian citizens not resident in Australia whose purchases are subject to a particular authorization regime justified by reasons of national interest.