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Old 08.12.2013, 13:32
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Swiss TAX Return and Property Income from the UK and UK Tax Return

Hi all,


This is the first year I have had to fill out a tax return in both the UK and Switzerland so was wondering what happens in the following scenario.

I have a property currently being rented out in the UK. I don't make masses from the property after expenses its well below the UK tax free amount an individual would have to pay.

When I moved to from the UK and I spoke to the HMRC they asked me if I had a property in the UK that I would be renting out. Of course I said Yes and they said I would need to fill out a tax return on the income earn on it.

From all I have read so far about filling out my tax return here in Switzerland I have to declare all income for both my wife and I not just from Switzerland. So this would include money earnt in the UK (property).

Will I be taxed twice? Once by UK and once by Switzerland? Do I need to fill in the UK Tax return?

Interested in hearing other peoples experiences in similar situations

Thanks

Ed
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Old 08.12.2013, 13:36
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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Hi all,


This is the first year I have had to fill out a tax return in both the UK and Switzerland so was wondering what happens in the following scenario.

I have a property currently being rented out in the UK. I don't make masses from the property after expenses its well below the UK tax free amount an individual would have to pay.

When I moved to from the UK and I spoke to the HMRC they asked me if I had a property in the UK that I would be renting out. Of course I said Yes and they said I would need to fill out a tax return on the income earn on it.

From all I have read so far about filling out my tax return here in Switzerland I have to declare all income for both my wife and I not just from Switzerland. So this would include money earnt in the UK (property).

Will I be taxed twice? Once by UK and once by Switzerland? Do I need to fill in the UK Tax return?

Interested in hearing other peoples experiences in similar situations

Thanks

Ed
You have to pay UK tax first & any tax you PAID is credited against any Swiss tax liability. You do need to fill in a UK tax return. In theory the UK agent or Tenants are supposed to deduct withholding tax as you don't live in the UK. This can be partially / fully reimbursed after completing a tax return.
It's quite likely you will have a Swiss tax liability on the rental income, you won't have an extra £10k allowance.

You will also possibly have a small wealth tax liability......
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Old 27.01.2014, 14:52
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

Well according to my info UK probably has a tax agreement with Switzerland which would mean one is not taxed in UK AND Switzerland on your UK assets..But you have to declare what you have and earn from any assets abroad.It will put you into another tax catagory in Switzerland but will not be double taxed.
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You have to pay UK tax first & any tax you PAID is credited against any Swiss tax liability. You do need to fill in a UK tax return. In theory the UK agent or Tenants are supposed to deduct withholding tax as you don't live in the UK. This can be partially / fully reimbursed after completing a tax return.
It's quite likely you will have a Swiss tax liability on the rental income, you won't have an extra £10k allowance.

You will also possibly have a small wealth tax liability......
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Old 27.01.2014, 21:01
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

We are in the same position and only pay tax in Switzerland on the rental income from UK property although the value of the property is included for wealth tax purposes. Tax returns are filled out for both countries but there is an agreement between the two countries whereby you only pay once.
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Old 27.01.2014, 21:13
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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but there is an agreement between the two countries whereby you only pay once.
No you pay the HIGHEST which in this case is possibly in the UK, however as you get a 10K personal allowance that may not be the reality.
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Old 27.01.2014, 21:37
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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No you pay the HIGHEST which in this case is possibly in the UK, however as you get a 10K personal allowance that may not be the reality.
But not if you are not resident in the UK, right? And from above (admitedly skim reading) I didn't see where he is located.

I certainly don't pay tax on my UK property in the UK, as I am exempt - I had to fill in a form - and put everything on my CH return.
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Old 27.01.2014, 21:57
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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But not if you are not resident in the UK, right? And from above (admitedly skim reading) I didn't see where he is located.

I certainly don't pay tax on my UK property in the UK, as I am exempt - I had to fill in a form - and put everything on my CH return.
In theory you should fill in a UK tax return on UK earnings exceeding the UK personal allowance. UK taxation is self assessment any tax paid in the UK will be credited against any Swiss tax liability. Due to a 10k (?)Personal allowance your Swiss liability would likely be larger than your UK liability however you would never be exempt from UK tax on income arising from property owned in the UK (less expenses). If you don't rent it out of course there is no UK liability , however any mortgage interest (if any) would be deductible in CH
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Old 28.01.2014, 16:48
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

well I was just wondering if property and assets in say Australia come under the category " total taxable wealth " ( Gesamt Steuerbares Vermögen ) in the Swiss Tax declaration or another category as these assets in another land are not taxed double.
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Hi all,


This is the first year I have had to fill out a tax return in both the UK and Switzerland so was wondering what happens in the following scenario.

I have a property currently being rented out in the UK. I don't make masses from the property after expenses its well below the UK tax free amount an individual would have to pay.

When I moved to from the UK and I spoke to the HMRC they asked me if I had a property in the UK that I would be renting out. Of course I said Yes and they said I would need to fill out a tax return on the income earn on it.

From all I have read so far about filling out my tax return here in Switzerland I have to declare all income for both my wife and I not just from Switzerland. So this would include money earnt in the UK (property).

Will I be taxed twice? Once by UK and once by Switzerland? Do I need to fill in the UK Tax return?

Interested in hearing other peoples experiences in similar situations

Thanks

Ed
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Old 03.02.2014, 21:22
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

I'm in a similar situation.
As part of my move to CH, I have Deloitte filing my tax returns for me.

I'm paid in CHF and have a permit B and tax is stopped at source.
Each month my payslip shows a Gross amount and then a long list of deductions and then my net. I live in Zug, so tax rate in kindly low.

I have a property in the UK, with NO mortgage and have my nephew and partner house sitting. They pay the bills (Utility , TV , Phone etc) and I pay a few (Council tax, Home insurance,- gardener sounds posh but costs £30 a month).

Deloitte even thou I have only been here since September 2013 and have earn't nowhere near CHF 120,000 in four months , are insisting they complete a tax form for me. They will ask the canton for a form they say.


I understand I will not pay wealth tax on oversea property ? Its just taken into account.
My wife does not work and owns half the property.

Feeling nervous , because my low tax rate (12%), seems to good to be true ...
Having moved from paying a 34% marginal rate in the UK.
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Old 03.02.2014, 21:33
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

Also I dont see how you can not declare a wealth in the way of a property in the UK.
When we signed our rent agreement in CH, we put down our UK address on he form somewhere and I,m sure we did the same when we opened our UBS bank account. So the Swiss tax man would only have to reference this data and contact the land registry in the UK and ask who owns that property.
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Old 03.02.2014, 21:39
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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Deloitte even thou I have only been here since September 2013 and have earn't nowhere near CHF 120,000 in four months , are insisting they complete a tax form for me. They will ask the canton for a form they say.
That's irrelevant. It's pro-rata. If your gross is 10,000 per month, then that's 120,000 per year, so that means tax return is due. In actual fact, you may have paid too much tax. You may have paid quellensteuer at the annual rate, whereas you've only been here for 4 months of the year. But Deloittes should be telling you this.
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Old 03.02.2014, 21:47
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

dmarkd - I'm so used to paying tax at higher rates in the uk and then being asked for more, the word tax form makes me shake and want to run for cover.

Either way prefer to know after 4 months where I stand.
If they owe me a refund , then happy days.
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Old 03.02.2014, 21:50
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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That's irrelevant. It's pro-rata. If your gross is 10,000 per month, then that's 120,000 per year, so that means tax return is due. In actual fact, you may have paid too much tax. You may have paid quellensteuer at the annual rate, whereas you've only been here for 4 months of the year. But Deloittes should be telling you this.
I'm on more than CHF 10,000 a month. So Deloitte are correct then.

Thanks for the reply.
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Old 04.02.2014, 07:04
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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I'm on more than CHF 10,000 a month. So Deloitte are correct then.

Thanks for the reply.
Hi Ravenk,
Just to add that in Switzerland when people do a tax form, they maintain 2 incomes in the calculation: the income to tax you on, and the income that determines the applicable rate. So you can have to pay tax on 100,000, at a tax rate that corresponds to someone earning 120,000. (tax rates are progressive, the more you earn the higher the % tax is). Foreign income / fortune from property are not taxed but are included in the rate calculation. Salary tax rate is based on annual salary. Children/marriage decrease the tax rate. Examples:
- eg. earned 100k, but received 1m from rent abroad: You will pay tax on 100k, at a rate that corresponds to an income 1100k.
- eg. worked 4 months at 10k month: pay tax for 40k, at a rate that corresponds to an income of 120k.
- eg, have wife and 1 child, joint income 200,000: pay tax for 200,000 at a rate that corresponds to an income of 87k (in VD).

This gives you the idea.
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Old 04.02.2014, 07:36
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

Ask deloitte if there's an allowance for maintaining a household in the UK. IIRC it's an 18K deduction. Of course, there are criteria to be met to be permitted this concession.

I own a house in CH. The wealth tax is a very tiny amount of my overall tax bill - don't stress too much about it.
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Old 04.02.2014, 10:58
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

Thanks for the replies so far. All useful info.

One more question.
A chap I work for says he owns his house and pays interest on a mortgage on such.
The CH tax authority however tax him on the benefit he gets by not paying a rent ?
He offsets this with his mortgage payment tax relief.

I own a house in the UK, no mortgage and charge my house sitters no rent.

Will the Swiss taxman , calculate what income I would have got from the house, if I let it. Not tax me on this in CH, but use it to calculate my tax rate ?

At the moment I have zero income in the UK. My only income is in CH and via my salary, that is taxed at source.

Thanks
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Old 04.02.2014, 11:16
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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A chap I work for says he owns his house and pays interest on a mortgage on such.
The CH tax authority however tax him on the benefit he gets by not paying a rent ?
He offsets this with his mortgage payment tax relief.
Yes, this is how it works when you own a Swiss property, you pay tax on the hypothetical rental value of your property. This is called Eigenmietwert. No idea if the same applies to overseas property.

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Will the Swiss taxman , calculate what income I would have got from the house, if I let it. Not tax me on this in CH, but use it to calculate my tax rate ?
Can only speculate on this, better ask your tax advisors.
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Old 04.02.2014, 13:03
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

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Thanks for the replies so far. All useful info.

One more question.
A chap I work for says he owns his house and pays interest on a mortgage on such.
The CH tax authority however tax him on the benefit he gets by not paying a rent ?
He offsets this with his mortgage payment tax relief.

I own a house in the UK, no mortgage and charge my house sitters no rent.

Will the Swiss taxman , calculate what income I would have got from the house, if I let it. Not tax me on this in CH, but use it to calculate my tax rate ?

At the moment I have zero income in the UK. My only income is in CH and via my salary, that is taxed at source.

Thanks

If you have a mortgage, then the mortgage interest in the year (nb: not the mortgage payments) will be tax deductable, ie they it is removed from both your taxable income and the income used to calculate the tax rate. This works for mortgages in both CH and abroad. Quite a good deal actually.


If you own a property in CH and you don't receive any rent (ie, you live in it, or is a holiday chalet) you have to pay 'notional income' for the priviledge. This corresponds to a quite-reduced rental value of the property. The formulas are quite complex, but eg if you rent a property for 2500 a month, then you buy this property to live in, the authorities will assess a 'rantal value' of say 1000 per month. They will then add 12x1000=12k for the year to your total income (both actual income, and income determining the tax) and tax you on that, basically a couple of 1000s CHF extra tax) . You can consider this as their compensation for the loss of tax they suffer, had the property been rented out (and discourages very rich people accumulating properties), ie tax on home ownership. It also simplifies things for the tax authorities, for every property in CH they will either receive actual tax on the rent paid (if rented out), or they will charge the landlord something similar if it's empty or owner-occupied.


If you own a property outside CH, then the same applies, but the rental income only affects the tax rate. So if it's rented out and you receive rent, the rent received is included to determine your tax rate (your ability to pay) but it's not taxed. If the property is empty, you have to declare yourself a 'rental value' this will be generally less than potential real rent. Generally, for properties abroad, they accept any notional rental value you declare, as long it's not ridiculously low. They dont care very much really. I don't think they accept zero though, unless it's un-inhabitable; so in your case since you don't receive any rent and cannot use the apartiment, maybe they will accept zero. In my canton the rule of thumb is annual rent of ~0.045 of the purchase price, but can settle for less. I wouldn't worry too much, as this only affects the tax rate:: even if you put say 1000chf per month (they will definitely accept), this translates to annual 12,000chf, so they will use the tax % rate corresponding to 12k more salary, generally this will be fractions of a % higher than your current tax rate. But if you have tax accountants, try for 0 or very low as they can argue in the free text explanation. Also the value of the appartment is included the "fortune - wealth tax" calculation, but then again only to assess the % rate of walth tax, you dont pay tax on the value of the property. But weath tax is really peanuts even if you own many properties.


PS: another good deal, is that if you carry out repairs in your property, you can try to claim them "tax-free": so if you spend £5k in repairs, you can ask to have £5k taken off your real taxable income. The only requirement is that next year you put the 'value' of the house a bit higher (as with the repairs the value has increased), but that's nothing compared to the tax saving on the repairs.
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Old 04.02.2014, 15:07
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

@slingb - Thanks for the comprehensive answer.
I appreciate the time it must have taken to answer so extensively.

Is Comparis.ch the best web site for tax estimations ?
I will pop in my salary now and work out my tax rate %...Gross and Net.
Then pop in salary + uk income (fictional rental income of say CHF 12,000 a year )and work at tax rate % ...
Compare difference between two rates.
Apply this rate to my salary.
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Old 04.02.2014, 17:00
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Re: Swiss TAX Return and Property Income from the UK and UK Tax Return

Comparis is OK, but:

- it wont tell you what your tax-free deductions will be (eg travel to work, social security etc). In CH a lot of the tax savings are becasue of the tax-free deductions, can get to 20k+social security easily (you have to calculate them manually). So income in comparis should be taxable, not total salary...
- comparis doesn't to different income for taxable income, different for tax rate. So may have to do two times and calulate manually.

For best results, I use my canton excel calculator (which is not Zug). Very accurate, esp as tax varies A LOT by the TOWN you live in, so you can chose the correct town. They have a version for foreign stuff, with does the caclulation correctly with foreign homes.
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