India will get its third set of Swiss bank account details of its citizens under the automatic exchange of information agreement with Switzerland this month, officials said on Sunday and this will include data on immovable property owned by Indians for the first time, officials said on Sunday.
Marking an important milestone in the Indian government’s fight against black money allegedly stashed abroad, India will this month get full details of flats, apartments and condominiums owned by Indians in Switzerland, as well as such Income from properties will also help in checking tax. liabilities associated with those assets.
The move assumes significance on the part of the European Alpine nation of Switzerland, as well as the long-standing belief about the Swiss banking system as a perceived safe haven for black money as a major global financial center. Working hard to restore.
While this will be the third time that India will get details about bank accounts and other financial assets held by Indians in Switzerland, it will be the first time that the information being shared with India will include information about immovable property assets. .
While the Swiss government has agreed to share details of real estate assets, information about contributions to non-profit organizations and other such foundations, as well as details of investments in digital currencies, are still in the automated exchange of information frameworks. is out of bounds, the official said.
Experts and those engaged in the business of attracting investments in Switzerland said the move would help dispel misconceptions about the illegality of all funds in Swiss properties, and also consider Switzerland as a preferred investment destination, including real estate properties. It would help a lot to set up.
Himanshu, founder and CEO of Switzerland for US SA, the parent firm of IDDI Investments, which is engaged in the business of attracting investments to Switzerland from India and other countries, including startups and real estate, said transparency has its virtues and propositions. The Government of Switzerland is welcome to share information on property ownership of foreign clients with other countries, including India.
“We found no valid reason for the Swiss authorities to hide such information. After all, property ownership is not something that can be kept hidden,” said the Geneva-based Indian-origin entrepreneur. for many years.
“Sharing such information with other countries under the AEOI will bring in greater transparency and act as a deterrent to those wishing to buy Swiss property with the wrongly acquired funds. The move will help make Switzerland an attractive investment destination. Will go a long way.” .
India had received the first set of details from Switzerland under AEOI (Automatic Exchange of Information) in September 2019. It was among 75 countries that received such information that year.
In September 2020, India, along with 85 other recipient countries, received the second set of Swiss bank account details of its citizens and entities, with which the Federal Tax Administration (FTA) of Switzerland last year issued financial statements within the framework of global standards on AEOI. Exchange of information on accounts. .
From this year, the Federal Council of Switzerland, the country’s top governing body, has decided to implement a key recommendation of the Global Forum on Transparency and the Exchange of Information for Tax Purposes, under which Swiss officials conduct transactions conducted by foreigners. Will also share details about investment. Swiss real estate sector.
However, some other recommendations of the Global Forum, including the sharing of information on digital currency accounts and contributions made to foundations and non-profit organizations, have not yet been accepted and therefore those details are not shared by Switzerland in India or any other country. will not be shared with for now.
Hectic lobbying is underway globally to persuade Switzerland to start sharing information about contributions made to digital currency accounts and nonprofits.
In each of the past two years, Switzerland has shared details of nearly three million financial accounts with various jurisdictions, while this year the count is expected to be higher.
For the past two years, India has been one of the major countries with which Switzerland has shared details about the financial accounts of clients of Swiss banks and various other financial institutions, while this year with respect to the details of real estate properties Higher figures are also expected. .
Officials with knowledge of the matter said that the total list of people involved in exchange of information by Switzerland this year will have a large number of resident and non-resident Indians as well as Indian companies.
In addition, Swiss authorities have so far this year shared information on more than 100 Indian citizens and entities, receiving requests for administrative assistance in cases related to investigations of financial wrongdoing, including tax evasion, officials said. . This count has remained the same over the years.
These cases mostly pertain to old accounts that could have been closed before 2018, for which Switzerland has shared details with India under an earlier framework of mutual administrative assistance as Indian authorities have been able to spot tax-related wrongdoings by those account holders. Prima facie evidence was provided. AEOI is applicable only to accounts that are active or were closed during 2018.
Some of these cases pertain to entities established by Indians in various overseas jurisdictions such as Panama, the British Virgin Islands and the Cayman Islands, while the individuals include mostly businessmen and some politicians and erstwhile royals as well as their family members.
The officials, however, refused to share details about the exact number of accounts or the amount of assets in the accounts held by Indians, citing strict confidentiality clauses governing the exchange framework for which information was shared with India. Has been.
Information shared by the Swiss authorities includes identification, account and financial information, such as name, address, country of residence and tax identification number, as well as information relating to the reporting financial institution, account balances and capital income.
The information exchanged allows tax officials to verify whether taxpayers have correctly declared their financial accounts on their tax returns.
The 86 countries covered under the AEOI in 2020 include 11 new jurisdictions – Anguilla, Aruba, Bahamas, Bahrain, Grenada, Israel, Kuwait, Marshall Islands, Nauru, Panama and the United Arab Emirates – in addition to the list of 75 countries, With whom the information was shared in 2019.
Switzerland’s first such exchange took place at the end of September 2018 and involved 36 countries, but India was not on the list at the time.
About 10,000 entities, including banks, trusts and insurance companies, as well as condominium and apartment owners’ associations, are expected to share information about their foreign clients with the Federal Tax Authority of Switzerland in order to share information with foreign jurisdictions. Can go
Switzerland has committed itself to adopting a global standard for the international automatic exchange of information in tax matters. The legal basis for the implementation of the AEOI in Switzerland came into force on January 1, 2017.
However, AEOI is applicable only to accounts that are officially held in the name of Indians and may include accounts used for business and other genuine purposes.
The Global Forum for Economic Co-operation and Development (OECD) reviews AEOI implementation.
According to experts, the AEOI data obtained by India has been quite useful to establish a strong prosecution case against those who have any unaccounted assets, as it provides complete details of all income along with deposits and transfers. which includes investing in and investing in securities. other assets.
Several officials, speaking on condition of anonymity, said the details mostly pertained to businessmen, including non-resident Indians, who now live in several Southeast Asian countries as well as the US, UK and even some Also settled in African and South American countries.
A Swiss delegation was in India in August 2019 before sharing the first set of details and the two sides also discussed possible steps to expedite the execution of tax information-sharing requests made by India in specific cases.
It is feared that many Indians may have closed their accounts following the global crackdown on black money, leading Switzerland under international pressure to open its banking sector to scrutiny, to make it safe for Swiss banks’ undeclared funds. The notion of being a haven can be removed.
Switzerland agreed to AEOI with India after a lengthy process including review of the legal framework required in India on data protection and privacy.
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