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-   -   Foreign Property - Tax implications (https://www.englishforum.ch/finance-banking-taxation/163604-foreign-property-tax-implications.html)

poot 04.12.2012 11:24

Foreign Property - Tax implications
 
Hello- my friend forgot to declare a foreign property he co-owns on his swiss tax (financed via a mortgage) return.

If he now declared it, does anyone know what would be the Swiss tax implications?

thanks for any info :)

Caviarchips 04.12.2012 11:27

Re: Foreign Property - Tax implications
 
AFAIK not much - just a wealth tax adjustment which isn't very big.

(I mean, if he has a property abroad he forgot about, it won't be very big to him/her :))

Belgianmum 04.12.2012 13:23

Re: Foreign Property - Tax implications
 
Did he declare the mortgage on it as part of his debt?
Usually one will offset the other and he may even end up better off if the mortgage is substantial.

I don't think he'll have to pay much in any case unless it's some kind of palace but that's not usually the kind of place you forget about.

poot 04.12.2012 15:50

Re: Foreign Property - Tax implications
 
cheers for the info

amogles 04.12.2012 16:08

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by Belgianmum (Post 1735113)
Did he declare the mortgage on it as part of his debt?
Usually one will offset the other and he may even end up better off if the mortgage is substantial.

I don't think he'll have to pay much in any case unless it's some kind of palace but that's not usually the kind of place you forget about.

A billionaire with Alzheimer's?

They do exist, you know.

syla31 04.12.2012 16:56

Re: Foreign Property - Tax implications
 
good info!

Carlos R 04.12.2012 17:01

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by Caviarchips (Post 1735007)
AFAIK not much - just a wealth tax adjustment which isn't very big.

(I mean, if he has a property abroad he forgot about, it won't be very big to him/her :))

Yein.

If the tax authorities decide to take him to task over it, the implications would be a punitive fine due to tax evasion and tax audit over the past 10 years... don't ask how I know, I just do... OK? :msnblush:

If you willingly declare it and submit 10 years of returns, you will be let off with just a requirement to pay back-taxes (if any are owed). Funnily - or not - enough if they owe you money, they don't pay that back.

Any good tax lawyer should be able to advise on this.

How long has this property been ah... emm... gathering dust and if only recent, where did the money come from?

Snoopy 04.12.2012 19:56

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by Carlos R (Post 1735351)
Yein.

If the tax authorities decide to take him to task over it, the implications would be a punitive fine due to tax evasion and tax audit over the past 10 years... don't ask how I know, I just do... OK? :msnblush:

If you willingly declare it and submit 10 years of returns, you will be let off with just a requirement to pay back-taxes (if any are owed). Funnily - or not - enough if they owe you money, they don't pay that back.

Any good tax lawyer should be able to advise on this.

How long has this property been ah... emm... gathering dust and if only recent, where did the money come from?

My understanding though is that if you report it yourself they are far more lenient than if they find you out. IIRC on my tax form these past years there has been a place to declare things that I may have "forgotten" in previous years. This article says that they won't fine you but will charge you interest on the tax owed:

http://www.nzz.ch/aktuell/wirtschaft...weiz-1.4924348

Phil_MCR 04.12.2012 20:30

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by Carlos R (Post 1735351)
Yein.

If the tax authorities decide to take him to task over it, the implications would be a punitive fine due to tax evasion and tax audit over the past 10 years... don't ask how I know, I just do... OK? :msnblush:

If you willingly declare it and submit 10 years of returns, you will be let off with just a requirement to pay back-taxes (if any are owed). Funnily - or not - enough if they owe you money, they don't pay that back.

Any good tax lawyer should be able to advise on this.

How long has this property been ah... emm... gathering dust and if only recent, where did the money come from?

don't be shy. do share the details and level of punitive fines...

Carlos R 05.12.2012 09:02

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by Snoopy (Post 1735541)
My understanding though is that if you report it yourself they are far more lenient than if they find you out. IIRC on my tax form these past years there has been a place to declare things that I may have "forgotten" in previous years. This article says that they won't fine you but will charge you interest on the tax owed:

http://www.nzz.ch/aktuell/wirtschaft...weiz-1.4924348

Indeed they are, but you still have to declare under some 10-year amnesty thing, where they ask you for 10 years of records. It is just that you don't get fined. An issue if you have UK banking records which only last 7 years.

Quote:

Originally Posted by Phil_MCR (Post 1735565)
don't be shy. do share the details and level of punitive fines...

We had none. Only had to pay back taxes. I believe if you look hard enough you'll find details on EF already :kissass: :D

poot 05.12.2012 16:03

Re: Foreign Property - Tax implications
 
My friend didnt realise / overlooked he had to declare foreign assets.......his tax advisor said it shouldnt matter too much, we're not talking millions

dannyt986 05.12.2012 16:23

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by poot (Post 1736531)
My friend didnt realise / overlooked he had to declare foreign assets.......his tax advisor said it shouldnt matter too much, we're not talking millions

He can always call the cantonal tax authority anonymously and try asking (obviously with CLI barred).

But I tend to agree they arent going to be too worried as they make very little money on such assets He will of course have to pay the adjusted tax amount and interest, but I would be very surprised if penalties.

FriendlyKiwi 05.12.2012 17:46

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by poot (Post 1736531)
My friend didnt realise / overlooked he had to declare foreign assets.......his tax advisor said it shouldnt matter too much, we're not talking millions

Send the Tax Dept a letter stating the value of the property

It will be added to the wealth to determine the wealth tax percentage rate, and then remove from the wealth to determine the actual wealth tax paid

The foreign assets and income (from property) are not taxed but must still be declared here

The owner will get looked at closely by the tax dept if he sells the property and suddenly a large monetary sum appears, unexplained, in his bank account

As they say: don't turn white money black... declare the assets.
For a typical house worth say 250000 you may be up for <20 CHF wealth tax implications, so it's peanuts.

fatmanfilms 05.12.2012 17:49

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by FriendlyKiwi (Post 1736718)
The foreign assets and income (from property) are not taxed but must still be declared here

This statement gets made all the time however I believe it to be incorrect. 90% of my assets are US stocks, my wealth tax is based on full market value & I pay wealth tax in CH, if foreign assets were excluded I would be way below the threshold.

dannyt986 05.12.2012 23:14

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by fatmanfilms (Post 1736720)
This statement gets made all the time however I believe it to be incorrect. 90% of my assets are US stocks, my wealth tax is based on full market value & I pay wealth tax in CH, if foreign assets were excluded I would be way below the threshold.

Yes because the statement is correct. But only **property** assets and income are excluded (although they do affect your tax rate). Moveable assets are included and taxed. Property liabilities (ie mortgages) are prorated to you entire assets location as opposed to the specific properties they are secured on.

FriendlyKiwi 05.12.2012 23:22

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by fatmanfilms (Post 1736720)
This statement gets made all the time however I believe it to be incorrect. 90% of my assets are US stocks, my wealth tax is based on full market value & I pay wealth tax in CH, if foreign assets were excluded I would be way below the threshold.

Stocks are moveable wealth and considered local, not foreign
I also own US stocks, and I bought them in Switzerland. They belong to Swiss wealth tax.

Foreign property (bricks and morter) is foreign non taxable assets

Guest 05.12.2012 23:22

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by poot (Post 1736531)
My friend didnt realise / overlooked he had to declare foreign assets.......his tax advisor said it shouldnt matter too much, we're not talking millions

Not ensuring that you understand the broadlines of the tax system of a country you are resident in- will very rarely be a valid excuse;) Otherwise we would all be at it wouldn't we. We have property in the UK and have declared this from the start. The tax is very small, so why take the risk? Paying fair taxes is fair enough imho.

fatmanfilms 05.12.2012 23:37

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by FriendlyKiwi (Post 1737108)
Stocks are moveable wealth and considered local, not foreign
I also own US stocks, and I bought them in Switzerland. They belong to Swiss wealth tax.

Foreign property (bricks and morter) is foreign non taxable assets

You clearly wrote foreign assets, thanks for clearing it up.

fatmanfilms 05.12.2012 23:39

Re: Foreign Property - Tax implications
 
Quote:

Not ensuring that you understand the broadlines of the tax system of a country you are resident in- will very rarely be a valid excuse;) Otherwise we would all be at it wouldn't we. We have property in the UK and have declared this from the start. The tax is very small, so why take the risk? Paying fair taxes is fair enough imho.
Ignorance of the law, can be used as a defense in CH, unlike in the UK!

amogles 05.12.2012 23:44

Re: Foreign Property - Tax implications
 
Quote:

Originally Posted by FriendlyKiwi (Post 1737108)

Foreign property (bricks and morter) is foreign non taxable assets

Not taxable as such, but still needs to be declared as it is used to calcite the tax rate.

For example, suppose the equity on your foreign property is 20% of your total asset value. Then they calculate the wealth tax on 100% but only charge you 80% of that.


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