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Court of Cassation: land zoned for a surface car park is building land for tax purposes

In order No. 26613, published on 11 October 2026, the Tax Division (Sezione tributaria) holds that zoning for public services is not sufficient to exclude the taxation of the capital gain (plusvalenza) under Article 67, paragraph 1, letter (b), of the TUIR. Only an absolute restriction on building that is not accompanied by planning compensation mechanisms (compensazioni) falls outside the regime.

A person who sells land that the town plan zones for public services, such as a surface car park, does not escape the capital gains regime of Article 67, paragraph 1, letter (b), of the Consolidated Income Tax Act (TUIR) merely because no covered volume can be built on the plot: according to the Italian Court of Cassation (Corte di Cassazione), that land has building potential that is relevant for tax purposes. This is the holding of the Fifth Civil Division (Tax Division) in order No. 26613, published on 11 October 2026, which lays down a principle of law (principio di diritto). According to the line of authority the order relies on, the capital gains regime gives way only to an absolute restriction on building (vincolo assoluto di inedificabilità) that is not accompanied by planning compensation mechanisms (compensazioni).

The case and the principle of law

For 2016 the Agenzia delle Entrate (Italian Revenue Agency) had assessed an undeclared capital gain of EUR 226,146 on the sale of land in Diano Marina. The taxpayer stated that the land was recorded in the cadastre (catasto) as an irrigated vegetable garden and was in fact farmed as one. On appeal, the Tax Court of Second Instance for Liguria (Corte di giustizia tributaria di secondo grado, judgment No. 308/01/2024) reversed the first-instance decision. It relied on the provisions of the municipal urban plan (piano urbanistico comunale, PUC) invoked by the taxpayer, having obtained confirmation from the Municipality that only surface car parks, without roofing or upper levels, were permitted on the area.

The Court dismissed the ground alleging merely apparent reasoning (motivazione apparente) and upheld the ground alleging breach of law. Referring to Article 36, paragraph 2, of Decree-Law No. 223/2006 and to Joint Divisions (Sezioni Unite) judgment No. 25505/2006, it followed the majority line of authority and described the contrary decisions (Court of Cassation Nos. 19668/2008 and 10713/2009) as isolated: for tax purposes, whether land is building land is assessed in the abstract on the basis of the general planning instrument, and it does not coincide with residential zoning. Under the principle of law, the capital gain cannot be treated as non-taxable solely because the land lies in a zone restricted to a purely public use. Land that the general town plan (piano regolatore generale) zones for public services or services of public interest, “such as ‘surface car parks'”, must be recognised as having building potential relevant for tax purposes. The judgment was set aside and the case remitted. The court to which the case is remitted must comply with the principle and with what the Court has ruled, and the Court has already held that the use as a surface car park confirmed by the Municipality does not exclude the capital gain. The dispute remains open.

The legislative framework

The transfer of building land by private individuals is governed by Article 67, paragraph 1, letter (b), of the TUIR, which taxes as miscellaneous income (redditi diversi) capital gains on transfers for consideration of land that may be used for building under the planning instruments in force at the time of the transfer, with no five-year limit and even where the land was acquired by inheritance or gift.

Under Article 36, paragraph 2, of Decree-Law No. 223/2006, an area is building land if it can be used for building under the general planning instrument adopted by the municipality, irrespective of approval by the region and of the implementing plans. The paragraph is repealed with effect from 1 January 2027 (Legislative Decree No. 141 of 5 August 2026). On the same date Presidential Decree No. 917/1986 is replaced by the consolidated Act on income taxes (testo unico delle imposte sui redditi, Legislative Decree No. 117 of 19 June 2026). For transfers on or after that date, the corresponding provisions must be checked.

The tax cost is the one provided for by Article 68, paragraph 2, of the TUIR: the purchase price plus related costs, revalued on the basis of the ISTAT consumer price index. For land received by inheritance, it is the value stated in the inheritance tax return or as finally determined, plus inheritance tax; for land received by gift, the donor’s cost plus gift tax; in both cases subsequent related costs are added. The capital gain is subject to separate taxation (tassazione separata, Article 17, paragraph 1, letter (g-bis), of the TUIR), unless the taxpayer opts for ordinary taxation (Article 17, paragraph 3).

Restrictions, public services and planning compensation

The order does not rely on the administrative law distinction between vincoli conformativi (zoning restrictions that shape the property right and do not give rise to an indemnity) and vincoli espropriativi (restrictions with expropriatory effect). It draws a different distinction: on the one hand, restrictions on use for public purposes, which do not remove the character of building land; on the other, absolute restrictions on building laid down generally and in advance, for example for environmental, landscape or hydrogeological reasons, including those set by higher-level plans, where in practice they rule out any use for building. A landscape restriction as a rule makes the works subject to authorisation (Article 146 of Legislative Decree No. 42/2004) but does not exclude them. Areas zoned for public services or services of public interest, such as car parks, roads and public parks with facilities (verde attrezzato), as a rule fall into the first category: the order cites Court of Cassation No. 14503/2016 and, for a zone F in which the technical implementing rules allowed the facilities to be entrusted to private operators under an agreement with the municipality, Court of Cassation No. 20950/2015. In our view, that very precedent shows that the possibility of private works, typical of a vincolo conformativo, carries weight in the classification.

Even an absolute restriction does not settle the question: it must be ascertained whether it is accompanied by planning compensation mechanisms, that is, by an exchange or increase of building density indices in favour of neighbouring land that also benefit the seller. The Court speaks of planning compensation (compensazioni), not of planning equalisation (perequazione): they are distinct mechanisms, but in our view the building right granted by the plan through planning equalisation mechanisms (meccanismi perequativi), which is transferable and can be recorded in the property registers (trascrizione, Article 2643, point 2-bis, of the Civil Code), is also relevant. Citing Court of Cassation No. 3243/2021, the Court identifies a price well above the normal agricultural value in the locality as an indicator that the land can be used for building, indirectly and in an economic sense. It is a weighty factor in the adversarial stage with the tax office (contraddittorio): an urban-land price paid for a plot on which building is prohibited needs to be explained.

Agricultural land, subdivision and expropriation

Land classified as agricultural falls outside the second part of letter (b): the capital gain is taxable only if the land was acquired no more than five years earlier, excluding land received by inheritance; for land received by gift the five-year period runs from the donor’s acquisition. For IMU (municipal property tax) purposes, land held and farmed by direct farmers (coltivatori diretti) and professional agricultural entrepreneurs (IAP) enrolled in the agricultural social security scheme, and still used for farming, forestry or livestock, is deemed not to be building land (Article 1, paragraph 741, letter (d), of Law No. 160/2019). Article 67 does not refer to this rule and, in our view, it does not take the capital gain on building land out of taxation.

The subdivision of land for development (lottizzazione), or works intended to make the land suitable for building, followed by the sale, fall under letter (a) of Article 67: the capital gain is included in total income and is reported on line RL5 of the Redditi PF return (individual income tax return).

Compensation for expropriation and the consideration for a voluntary transfer within the expropriation procedure, for land in homogeneous zones A, B, C and D or zoned for public housing, are subject to a 20% final withholding tax (ritenuta a titolo d’imposta), unless the taxpayer opts for ordinary taxation (Article 11, paragraphs 5 to 8, of Law No. 413/1991; Article 35 of Presidential Decree No. 327/2001). Areas zoned for public car parks often lie in zone F, outside this regime. A negotiated sale outside the procedure falls under Article 67, paragraph 1, letter (b).

In practice

• The seller should request the zoning certificate (certificato di destinazione urbanistica) from the Municipality in good time: it must be attached to the deed of sale on pain of nullity and remains valid for one year unless the planning instruments have been amended in the meantime (Article 30, paragraphs 2 and 3, of Presidential Decree No. 380/2001). The technical implementing rules and any amendments adopted must also be read: for tax purposes what counts is the general planning instrument adopted at the date of the transfer, not the actual use or the cadastre (catasto).
• If the land was held on 1 January 2026 and its tax cost is low, the seller should consider a step-up in tax basis (rideterminazione del valore, Article 7 of Law No. 448/2001) by 30 November 2026. This requires a sworn appraisal and payment of the substitute tax, or of the first instalment, by that date. Under the text in force, the tax is 18% of the appraised value, payable in a maximum of three instalments with interest at 3% per year on the second and third. It is advisable to have the appraisal sworn before the deed of sale.
• The tax adviser reports the capital gain in the Redditi PF return for the year in which it is collected, on line RM2 (code 2), ticking the box if the taxpayer opts for ordinary taxation; on a gain not subject to withholding tax, a 20% payment on account is due by the deadline for the balance payment (Article 1, paragraph 3, of Decree-Law No. 669/1996), tax payment code 4200.
• A seller who claims an absolute restriction on building should document the provision that prohibits building and the absence of planning compensation mechanisms or transferable building rights, with an appraisal that explains the price compared with the agricultural value.
• If the tax office issues a notice of assessment (avviso di accertamento), value and cost are the first issues to contest, both in the adversarial stage with the tax office and in the dispute-avoidance procedures, because on classification the Court of Cassation follows a clear majority line of authority.

Frequently asked questions

I inherited the land many years ago: must I report the capital gain?

Yes, if at the date of the transfer the land is building land under the general planning instrument: for letter (b), neither the time elapsed nor the fact that the land was acquired free of charge matters. The cost is the value stated in the inheritance tax return, plus inheritance tax and related costs; if it is low, a step-up in tax basis should be considered.

I am selling the area to the Municipality, which is to build the car park: is this an expropriation?

Only if the deed is a voluntary transfer executed within the expropriation procedure, after the declaration of public utility and before the expropriation decree is enforced (Article 45 of Presidential Decree No. 327/2001). In that case, for land in zones A, B, C and D or zoned for public housing, the public body applies the 20% final withholding tax, unless the taxpayer opts for ordinary taxation (Article 11 of Law No. 413/1991; Article 35 of Presidential Decree No. 327/2001). Areas zoned for public car parks often lie in zone F, outside this regime: there the treatment must be checked case by case. An ordinary sale to the public body remains a transfer subject to Article 67, paragraph 1, letter (b), of the TUIR.

Does the order close the dispute?

No. The Court set aside the judgment and remitted the case to the Tax Court of Second Instance for Liguria, sitting in a different composition, which will have to comply with the principle of law and with what the Court of Cassation has decided (Article 384, paragraph 2, of the Code of Civil Procedure). The proceedings must be resumed within six months of the publication of the order, failing which the entire proceedings lapse (Article 63 of Legislative Decree No. 546/1992, in force until 31 December 2026; for proceedings resumed in 2027 or later, the corresponding provision of the consolidated Act on tax justice must be checked). In other proceedings the principle applies as a precedent: it confirms a majority line of authority, so that in our view the argument that land is not building land solely because of its public zoning has little prospect of success.

Sources

Court of Cassation, Fifth Civil Division (Tax Division), order No. 26613 published on 11 October 2026, decided in chambers on 23 September 2026, general docket No. 24519/2024

Articles 17, paragraph 1, letter (g-bis), and paragraph 3; 67, paragraph 1, letters (a) and (b); 68, paragraph 2, of Presidential Decree No. 917 of 22 December 1986 (text in force on 11 November 2026)

Legislative Decree No. 117 of 19 June 2026 (consolidated Act on income taxes, in force on 1 January 2027)

Article 36, paragraph 2, of Decree-Law No. 223 of 4 July 2006, converted into law by Law No. 248 of 4 August 2006 (text in force until 31 December 2026); Legislative Decree No. 141 of 5 August 2026

Article 11, paragraphs 5 to 8, of Law No. 413 of 30 December 1991

Articles 35 and 45 of Presidential Decree No. 327 of 8 June 2001

Article 30, paragraphs 2 and 3, of Presidential Decree No. 380 of 6 June 2001

Article 146 of Legislative Decree No. 42 of 22 January 2004

Article 2643, point 2-bis, of the Civil Code

Article 7 of Law No. 448 of 28 December 2001

Article 1, paragraph 741, letter (d), of Law No. 160 of 27 December 2019

Article 1, paragraph 3, of Decree-Law No. 669 of 31 December 1996, converted into law by Law No. 30 of 28 February 1997

Article 384, paragraph 2, of the Code of Civil Procedure; Article 63 of Legislative Decree No. 546 of 31 December 1992 (text in force until 31 December 2026)

Agenzia delle Entrate, instructions for the Redditi PF 2026 return, booklet 2, schedules RL and RM