India receives 3rd set Swiss bank details for this month. First time information on real property assets.

Marking a key milestone in the Indian government’s fight against black money allegedly stashed abroad, India will get this month the complete information on flats, apartments and condominiums owned by Indians in Switzerland as also on earnings made from such properties to help it look into tax liabilities associated with those assets.

This move is significant for both Switzerland and the European Alpine country. It aims to position itself as a major global financial center while also addressing the persistent perception that the Swiss banking system is a safe haven for illegal money.

India will receive information about Indian assets, including bank accounts. This is the third such exchange.

Officials said that while the Swiss government agreed to share information on real estate assets with the public, information regarding contributions to foundations and non-profit organizations as well details about investments in digital currency remains out of the bounds of the automated exchange of information framework.

According to experts and others involved in the attraction of investments to Switzerland, the decision would clear up any misconceptions regarding all inflows into Swiss assets as being illegal and will help establish Switzerland as an attractive investment destination.

Himanshu is the founder and CEO of Switzerland For You SA. This parent company of IDDI Investments is in the business to attract investments from India and other nations to Switzerland. He said that transparency is one of its virtues. The proposal by the Swiss government to share information on foreign client property owners with countries such as India, is welcomed.

“We find no valid reason for Swiss authorities to hide such information. After all, the ownership of property is not something which can be kept under wraps,” said the India-origin entrepreneur who goes by his first name only and is settled in Geneva for many years.

“Sharing of such information with other countries under AEOI will bring in more transparency and act as deterrence for those intending to buy Swiss properties from ill-gotten wealth. The move will go a long way in making Switzerland an attractive investment destination,” he added.

In September 2019, India received its first details from Switzerland as part of AEOI (Automatic Exchange of Information). India was among the 75 countries who received this information that year.

In September 2020, India received the second set of Swiss bank account details of its nationals and entities, along with 85 other recipient countries with whom Switzerland’s Federal Tax Administration (FTA) exchanged information on financial accounts within the framework of global standards on AEOI last year.

From this year, Switzerland’s Federal Council, the country’s top governing body, has decided to implement a key recommendation of the Global Forum on Transparency and Exchange of Information for Tax Purposes, under which Swiss authorities will also share details about investments made by foreigners in the Swiss real estate sector.

However, the Global Forum has made other suggestions, such as sharing information about digital currency accounts, contributions to foundations, and other non-profit organizations. These details are not yet accepted by Switzerland and India.

Globally, hectic lobbying has been underway to persuade Switzerland to share information on digital currency accounts as well as contributions to non-profit organizations.

Switzerland shared information about almost three million accounts over the two previous years with several jurisdictions. The count for this year is anticipated to increase.

India was a prominent country with whom Switzerland shared information about clients’ financial accounts with Swiss banks over the past two years. This year, it will also be sharing details regarding real estate property details.

Resident and non-resident Indians, as well as Indian companies, would account for a sizeable number in the overall list of those figuring in this year’s exchange of information by Switzerland, officials privy to the development said.

Officials added that the Swiss authorities had already provided data about over 100 Indian citizens and organizations this year upon receiving administrative assistance requests in cases involving financial investigations, such as tax evasion. The number of Indian citizens and entities has also been consistent over the years.

This mostly concerns older accounts, which may have been closed prior to 2018. For these cases, Switzerland shares details with India as part of an earlier framework for mutual administrative assistance. The Indian authorities were able to provide prima facie evidence of wrongdoing tax-related by account holders. AEOI applies only to accounts which were either closed or are currently active during 2018.

These cases involve entities that were set up in India by Indians, such as the British Virgin Islands or the Cayman Islands. The individuals involved are mostly businessmen, politicians, and former royals, as well as family members.

Officials refused to disclose details on the precise number of Indian accounts and the amount of Indian assets, although the information had been provided. They cited strict confidentiality clauses that govern the exchange system.

Swiss authorities share information about identification and account, including financial and financial information such as name and address and country of residence. They also provide information regarding the financial institution reporting, capital income and account balance.

Tax authorities can verify that taxpayers correctly declare their financial records in tax returns by using the exchanged data.

The 86 countries covered under the AEOI in 2020 included 11 new jurisdictions — Anguilla, Aruba, Bahamas, Bahrain, Grenada, Israel, Kuwait, Marshall Islands, Nauru, Panama and the United Arab Emirates — in addition to a list of 75 countries, with whom information was shared in 2019.

Switzerland’s first such exchange took place at the end of September 2018 and involved 36 countries, but India did not figure in the list at that time.

Nearly 10,000 entities, including financial institutions such as banks, trusts and insurers, as also condominium and apartment owners’ associations are expected to have shared details about their overseas clients with the Federal Tax Authority of Switzerland for further sharing with foreign jurisdictions.

Switzerland has pledged to implement the global standard on automatic tax exchange. On January 1, 2017, the legal framework for AEOI implementation in Switzerland was established.

AEOI is only applicable to Indian-owned accounts. They might also include Indians who use them for business or other legitimate purposes.

AEOI implementation is reviewed by the Global Forum of Organisation for Economic Cooperation and Development.

Experts believe that the AEOI data India received was very useful in establishing strong prosecution cases against anyone with unaccounted wealth. It provides all details about deposits, transfers, and earnings through securities investments, among other things.

Multiple officials spoke on condition that they remain anonymous and said the details mostly relate to businessmen. These include non-resident Indians currently residing in South-East Asian and British countries, as well some African or South American countries.

In August 2019, a Swiss delegation visited India before any details were available. The two sides discussed how to speed up the processing of specific tax-information sharing requests from India.

Many Indians may have shut down their accounts following a worldwide crackdown against black money. Switzerland has now opened its banking sector to scrutiny in an international effort to dispel the perception that Swiss banks are safe havens for unreported funds.

After an extensive process including review of India’s legal framework on data privacy and confidentiality, Switzerland signed the AEOI agreement with India.