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Old 16.04.2021, 08:01
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Impact of not declaring property value abroad on tax and how to correct it?

When I arrived in Switzerland (2018) I did not realise that I had to declare that I own a property and receive rent in the UK. Since arriving I have been taxed at source (<120K) so I haven't had to fill in any returns other than a Pillar3a adjustment this year. If this best thing to do is contact a tax advisor, then I am happy to do so but I have some initial questions:

1. What are the implications of not declaring property on my tax since 2018 both a cantonal (Zurich) and federal level?

2. What is the best way to put it right? Should I just write to tax office and declare everything in a letter?
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Old 16.04.2021, 08:17
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Re: Impact of not declaring property value abroad on tax and how to correct it?

Are you a UK tax payer declaring the rental income in the UK? You should be to use your UK tax free allowance.

If this is the case, all the Swiss tax people are interested in is the value of the UK property. Here you have great scope saving any wealth tax by keeping he value low. They have no idea of the value and as wealth tax is so low that they are not particularly interested.

Our house in the UK was up for sale when we came here (1989) and we wondered if we should declare it a the price we were selling at. We had a meeting at a Zurich tax office to discuss this and he said put in half the value!
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Old 16.04.2021, 08:44
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Re: Impact of not declaring property value abroad on tax and how to correct it?

I rent out my house in the uk but the net income is below the uk tax threshold. Years ago I got a note from the UK tax authority that I didn't need to keep filling in a tax form. (but had to tell them if my uk income position changed)

I declare it as an 'asset' as part of my wealth tax and show income against costs (mortgage interest payments) and the net effect is a small charge on my Swiss tax bill.

I wouldn't worry about it until you have to complete a tax form in CH.
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Old 16.04.2021, 09:15
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Re: Impact of not declaring property value abroad on tax and how to correct it?

Thanks for your advice. Yes, my income from the property in the UK is pretty low and below the threshold, I have always filled out my UK tax return since being here. I tried looking for advice on the internet and there is quite a lot of conflicting information. There are a couple of articles that worried me. This one in particular:

https://www.helloswitzerland.ch/maga...ate-for-expats

I also read somewhere that the value of the property could impact my income tax at a federal level, which worried me as that would mean retrospective correction over the past three years.

Maybe I'll just call the tax office today and explain the situation openly.
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Old 16.04.2021, 09:18
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Re: Impact of not declaring property value abroad on tax and how to correct it?

I didn't declare the proceeds for my UK house sale (sitting in a UK bank account) in my first year here. Just oversight. Contacted the tax office the next year and it was all sorted out. No penalty, no extra tax to pay.
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Old 16.04.2021, 14:18
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Re: Impact of not declaring property value abroad on tax and how to correct it?

It'll depend on the canton but as an anecdote was helping translate for a friend in a situation a bit like this a couple of years back and they made a declaration and for all the worries about penalties and backpayments, the tax office just said thanks for the update and were happy with an old valuation too.


There was a bit more to the file with supporting documents, the official exchange rates at the time, proof of local taxes paid on the income etc but at least in this once instance there was no problem coming forward to explain.
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Old 16.04.2021, 14:56
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Re: Impact of not declaring property value abroad on tax and how to correct it?

Quote:
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Are you a UK tax payer declaring the rental income in the UK? You should be to use your UK tax free allowance.
If this is the case, all the Swiss tax people are interested in is the value of the UK property
I don't understand what relevance declaring UK rental income in the UK makes. You seem to be claiming that it means you don't have to declare the rental income in Switzerland. Maybe that's a peculiarity in your canton but my understanding that all worldwide income including rental income even if it comes under direct taxation elsewhere needs to be declared. The amount of UK rental income adds to Swiss income to establish the tax rate but only the Swiss income is taxed at this rate. Uk rental income will *always* come under UK taxation and is *never* directly taxed in Switzerland, according to my understanding which I'm happy for someone to correct.

So to my understanding the OP would need to also declare the UK rental income and possibly repay back taxes.
However, if I were not required to make a Swiss tax declaration I (personally) would continue to overlook the UK situation.
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Old 16.04.2021, 14:59
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Re: Impact of not declaring property value abroad on tax and how to correct it?

[QUOTE=Landers;3296979]
Quote:
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Are you a UK tax payer declaring the rental income in the UK? You should be to use your UK tax free allowance.

I don't understand what relevance declaring UK rental income in the UK makes. You seem to be claiming that it means you don't have to declare the rental income in Switzerland. Maybe that's a peculiarity in your canton but my understanding that all worldwide income including rental income even if it comes under direct taxation elsewhere needs to be declared. The amount of UK rental income adds to Swiss income to establish the tax rate but only the Swiss income is taxed at this rate. Uk rental income will *always* come under UK taxation and is *never* directly taxed in Switzerland, according to my understanding which I'm happy for someone to correct.

So to my understanding the OP would need to also declare the UK rental income and possibly repay back taxes.
However, if I were not required to make a Swiss tax declaration I (personally) would continue to overlook the UK situation.
This is correct, at least for SG.

Remember it's net income - you also subtracts the costs etc, which similarly don't count for actual taxation only setting the rate.
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