Swiss taxation and foreign taxable items
We have often found that reporting foreign taxes, such as real property, often leads to misunderstanding and can lead to errors in reporting. the simple fact that it is not indicated for fear of being imposed doubly.
Below we will try to summarize the effects on the tax calculation and its consequences and our conclusions on this subject.
Calculation of taxes
The tax rate is the first impact, as it is progressive in Switzerland. Even items are not taxable in Switzerland, the rate for calculating the tax is selected in the scale according to international income.
The second important impact can be on the distribution of debts and then deductible interest which will be based on the taxable assets in each country. What will happen, if you have, for example, a debt-free property abroad and a property in Switzerland linked to a mortgage debt, is to reduce the deductions.
Depending on the case, foreign income (incl. the rental value of the property abroad), will have an impact on social deductions (medical expenses, etc.), also calculated on the basis of international income.
Consequences
An omission may of course have an effect on the final calculation but also, apart from taxes, an effect on the calculation of health insurance or other social benefits subsidies. The elements are generally repeated over 10 years. Penalties and late interest generated in addition. This makes the final situation particularly difficult.
Our conclusions
Below we will try to summarize the effects on the tax calculation and its consequences and our conclusions on this subject.
Calculation of taxes
The tax rate is the first impact, as it is progressive in Switzerland. Even items are not taxable in Switzerland, the rate for calculating the tax is selected in the scale according to international income.
The second important impact can be on the distribution of debts and then deductible interest which will be based on the taxable assets in each country. What will happen, if you have, for example, a debt-free property abroad and a property in Switzerland linked to a mortgage debt, is to reduce the deductions.
Depending on the case, foreign income (incl. the rental value of the property abroad), will have an impact on social deductions (medical expenses, etc.), also calculated on the basis of international income.
Consequences
An omission may of course have an effect on the final calculation but also, apart from taxes, an effect on the calculation of health insurance or other social benefits subsidies. The elements are generally repeated over 10 years. Penalties and late interest generated in addition. This makes the final situation particularly difficult.
Our conclusions
It is important not to omit items in the declaration. In particular the agreements on the exchange of international information, the digitization of data and the crossing of information with other taxpayers means that the authorities will probably have to get their hands on information that had not been communicated to them.
The fact that the software transmitted by the cantonal authorities are not able to calculate correctly the international and intercantonal repairs sometimes plunges the taxpayers into an unknown and projects a calculation too high which probably has the consequence to encourage people to omit things wrongly.
Sometimes a spontaneous denunciation that avoids penalties or fines is possible. However, this is limited to elements that would not be affected by automatic exchange of information.
It must also be taken into consideration that a spontaneous denunciation must be complete and can only be made once.
It may also be interesting to analyse whether deductible foreign material should be taken into account.
It is therefore wise to be accompanied by a professional to regularize the situation.
Fiduciaire Monachon Sàrl is competent in this field and remains at your disposal.
The fact that the software transmitted by the cantonal authorities are not able to calculate correctly the international and intercantonal repairs sometimes plunges the taxpayers into an unknown and projects a calculation too high which probably has the consequence to encourage people to omit things wrongly.
Sometimes a spontaneous denunciation that avoids penalties or fines is possible. However, this is limited to elements that would not be affected by automatic exchange of information.
It must also be taken into consideration that a spontaneous denunciation must be complete and can only be made once.
It may also be interesting to analyse whether deductible foreign material should be taken into account.
It is therefore wise to be accompanied by a professional to regularize the situation.
Fiduciaire Monachon Sàrl is competent in this field and remains at your disposal.