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Old 19.02.2021, 14:05
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Foreign Real Estate value and exchange of information

I have been reporting in my last 5 years tax returns a certain value for a flat I have in the EU (not rented but for my own use). Despite I attached the cadastral value documentation, the Tax Consultants that prepared my first 2 years Tax Returns included a higher amount (I was fine assuming regulations require to declare the actual market value).

However I just received the outcome of my latest Tax Return and the tax authorities (Basel Stadt) corrected that amount including a lower value more beneficial to me that broadly corresponds with the latest reviewed cadastral value)

Do you know if:

A) the exchange of information with EU countries is effective and this information is exchanged regularly with the Tax Authorities?

B) can I request to adjust the highest value I have wrongly declared in the last 4 years? Broadly speaking I think that would mean getting a refund of circa 500-700 francs each year...

Thanks for any advice or experience you can share! Much appreciated
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Old 19.02.2021, 19:14
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Re: Foreign Real Estate value and exchange of information

Your consultants are just dumb. An official looking figure taken from an official looking government paper is totally kosher. And it doesn't really matter that it bears no relationship to market value.

If you buy an old, say 50+ yo property in Switzerland it will also most likely come with a tax value that makes zero market sense. For CH properties there's a lower limit these days (in ZH at least), you need to declare at least 70% of purchase price. But they explicitly instruct you to do so after you buy. No such rules for foreign properties!

Also making mistakes on tax declaration are no big deal in switzerland and no crime. There are many amnesia sufferers here when it comes to filing taxes. Honest explainable mistakes, you're not even risking any fine, but just pay the diff in taxes. If discovered. What you really don't want to do and where the line is drawn is submitting falsified third-party documentation/receipts/statements/etc -that's fraud and can get you jail. Simply entering wrong figures into a tax forms - (almost?) never. So don't be afraid to ditch your consultants and do your taxes yourself.

And there's no exchange of information about properties. That's for bank/brokerage accounts only. Your bank account receiving rental income will get reported. Property itself - not.
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Old 19.02.2021, 22:18
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Re: Foreign Real Estate value and exchange of information

I don't think there is any actual exchange of information. In the Swiss tax system trust is very important. And they probably wouldn't actually exchange information unless there were reasonable grounds to suspect criminal tax evasion. But then if you do tick all the right boxes, then that is what might happen.

I have a property in Spain and in Spain they have a system similar to Switzerland in which the government creates a fictitious value for your house and uses that for tax purposes. In my case this is about one third of the market value. So it's quite a generous undervaluation. I just provide that value to the Swiss tax authorities and they have never quibbled over it, or even asked me to show any documents to back it up. In fact I don't know if I could back it up if I had to because AFAIK I can access the data online only and a screenshot isn't exactly legal proof.

I don't think the Swiss would be able to access that data even if they wanted to and had access. In the tax form they ask for the street address of the property but in the Spanish system the parcel of land (and thus the house) is identified by the cadaster number of the land registry. AFAIK there is no simple way to connect a street address to a cadaster number. The plots in my area seem to be numbered randomly. The cadaster number is just something you know because it's written so on the purchase contract document. So it's not something they would easily look up from a Swiss tax office where they probably don't speak a word of Spanish. But maybe its something a detective could work out if for any reason they decided to set one on me. But even so it would be a lot of work.

I previously had a property in Germany and in Germany there is no official governtment set value. I asked the ZH tax office what value to use and they said, just estimate something "nach besten Wissen und Gewissen". So obviously this is not something they are extremely rigid about.
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Old 20.02.2021, 08:08
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Re: Foreign Real Estate value and exchange of information

Thanks a lot this is helpful, just curious how/why the tax authorities corrected the value I declared from 167k to 120k (that corresponds to the most recent cadastral value...) I was wondering whether they received that info from my home country... and now I donít know if it would be good to open the discussion and change the value I declared in the last 3-4 years...
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Old 20.02.2021, 08:58
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Re: Foreign Real Estate value and exchange of information

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Thanks a lot this is helpful, just curious how/why the tax authorities corrected the value I declared from 167k to 120k (that corresponds to the most recent cadastral value...) I was wondering whether they received that info from my home country... and now I donít know if it would be good to open the discussion and change the value I declared in the last 3-4 years...
The extra wealth tax is a few CHF, certainly not several hundred a year.
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Old 20.02.2021, 14:46
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Re: Foreign Real Estate value and exchange of information

Imputed income from foreign properties can still push you into higher tax bracket, while not being directly taxed
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Old 20.02.2021, 14:56
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Re: Foreign Real Estate value and exchange of information

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and now I donít know if it would be good to open the discussion and change the value I declared in the last 3-4 years...
You might still change any tax declaration where you had not yet received the final calculation. Once you got the final calculation it is, as the name implies, final (minus the 30 day objection period).
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Old 20.02.2021, 15:24
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Re: Foreign Real Estate value and exchange of information

Did they put the value at exactly 120K, or at exactly the imputed value from your home country? Typically the tax valuation might be something like 120,674.22 EUR. If that precise figure has been used, that would be proof of exchange of information IMHO. If the figure is similar but not identical, that sounds like there must be some other explanation.
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Old 20.02.2021, 15:32
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Re: Foreign Real Estate value and exchange of information

Maybe they just looked up the figure online? In some countries property value, transactions, sometimes even owners, are not considered private information and made public for everyone online.
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Old 20.02.2021, 22:31
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Re: Foreign Real Estate value and exchange of information

Well, I don't see how the tax exchange information could ever work without a personal tax identification number system unified across all member states.
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Old 21.02.2021, 01:49
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Re: Foreign Real Estate value and exchange of information

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Well, I don't see how the tax exchange information could ever work without a personal tax identification number system unified across all member states.
Fuzzy logic matching... its not accurate, but its much much better than guessing.

Many tax authorities in the west (and Russia) have spent the past few years quietly building big data centres specifically to match the exchanged information

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Ian
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Old 21.02.2021, 13:14
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Re: Foreign Real Estate value and exchange of information

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Fuzzy logic matching... its not accurate, but its much much better than guessing.

Many tax authorities in the west (and Russia) have spent the past few years quietly building big data centres specifically to match the exchanged information

Regards


Ian
Not only that, but the structures and formats of the different tax number systems and schemes are pretty much public domain. Germany, for example, knows pretty well what your Swiss tax number means. And vice versa. Even without exchanging any protected information. Computers are very good at dealing with amorphous data. It's human workers who like to have standard and unified data formats.
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