Wrong tax declaration for 2019 will be tax evasion?

Taxes
1

Hello Mustachians,
I probably need some tax and legal advice related to a “wrong” tax declaration for 2019. Below the full story.

Back on November 2019 I moved to Switzerland from my home country, the tax declaration for the 2019 only contained the details of my income, and I did not move to Switzerland my previously earned money and a donation from parents (>400k). The main reason is that I was not sure to stay in Switzerland and my job was temporary as well as the permit.

On 2020 I planned (and can) to stay in Switzerland for longer time, so I move all my money (>400k) in my Swiss broker and (of course) I declared everything at then end of the year.

Now the situation is this:

  • declaration for 2019 with net wealth <50k
  • declaration for 2020 with net wealth >500k

On 2022 I got some complains from the tax office asking if this increase of wealth comes from a side job or money laundry, and I was able to explain that I moved my money on 2020 with wire transfer (SEPA) and all came from my personal bank account in my home country. Everything seems solved till now that I received a clarification request for the declaration of 2019 from the Kantonale Verwaltung.

Despite I already paid the source wealth tax in my home country for 2019 (probably in my home country is more expensive than the wealth tax in Switzerland), and despite my living in Switzerland on 2019 was about 2 months, this is technically tax evasion and potentially criminal offence.

Did you had any experience of moving to Switzerland and missed to declare something in the first year?
I was tax resident outside Switzerland for 10 months in 2019, is it correct that I have to pay the taxes for the wealth and declare it?
Should I get a lawyer to handle this issue? And what kind of lawyer?

2

Why wouldn’t you have to declare it? (It will be pro rated for the time you were resident)

I’d probably try to tell them you made a mistake, most likely they’ll make you pay the difference with a penalty but it’s unlikely to escalate further. (But don’t make further mistakes)

A lawyer will likely cost more than that for the same result.

Unless there’s clear fraud I don’t think it’s a criminal offence (unlike some other countries). Eg Steuerstrafverfahren und Bussen for Bern but I assume similar for other cantons.

6 Likes
3

If they 400k belonged to you by 31 December 2019, then it should have been declared in the 2019 tax return and wealth tax paid on it.

3 Likes
4

I think best would be to call the Tax office and try to explain the situation. The wealth tax on 400K is important but not that huge. It’s not like you avoid million dollar tax.

The issue is that in your 2020 return you are more or less saying that you transferred this money from your account. But in 2019, this money was not shown in your accounts.

I think the main thing they need to understand is where this 400K came from. That’s the main point. Remember in some cases, such a donation could be considered as taxable event. For example if your sibling gave this money, this would be taxed at a specific rate depending on canton.

However, in your case, it came from your family. Just explain it to them.

If you feel worried , then perhaps ask a tax consultant for an official advise. People here wouldn’t really know the legal details. Comments will be based on perceptions

2 Likes
5

Tax evasion is tax evasion, doesn’t matter by how much [1]. In some cantons we are already at a few thousand francs in taxes.

  1. Fedlex ↩︎

6

In CH not declaring taxes correctly is not a criminal offense (if no fraud is involved), you will just need to pay the missing wealth / income tax for 2019. There’s also a procedure to ask yourself for a correction of past declarations in case the tax office didn’t know about the issue, maybe you can still go that way, in which case you won’t have to pay any penalty.

1 Like
7

Did you complete a tax declaration for 2019 and 2020 or were taxed at source? If declaration did you already receive the decision for both years with the final tax bill?

Did you complete the paperwork correctly in your home country so that you left on Oct 31 and arrived in CH on 1 Nov? Do you know if there is a double tax treaty in place with your home country?

If so you probably should not have to pay twice. Search for “convention double imposition suisse - xxxx” (or equivalent)

A separate question is whether either country will allow retrospective credits if you did not follow the procedure correctly (e.g. not declaring the 400k)

In the end I would assume they will ask you to pay the missing tax + interest and in the worst case potentially a penalty. Taking example of Geneva wealth tax on 400k would be 1-2k CHF. If you are stressed try to talk to the tax authorities, usually they are helpful

8

First point
Did tax office say this ? Or you are reading it on internet and calling this a “criminal offence”?

Second point -: I think it’s not about where you paid tax . It’s about what you declare. You made tax declaration in CH for 2019. Two numbers matter the most

  1. Income during the period
  2. Wealth at end of year

So wherever you were tax resident, your bank accounts and all other assets around the world had to be declared because not doing this would mean inaccurate declaration. It’s not only Swiss accounts, it’s worldwide.

9

Sure.

If there is a penalty for late payment of tax, then that would also incur.

10

I think you might be mixing couple of things. The tax that you paid at source for donation from your family is not wealth tax , that most likely is gift tax. Right? Otherwise why would it be applied at source

The tax CH applies on wealth at end of year is wealth tax and it’s not dependent on source.

CH an also applied gift tax on gifts depending on donor. However if you were not resident of CH during the period you received the gift, this might not be applicable.

With respect to double taxation treaty, you should read the treaty about gift tax, wealth tax etc to understand which country has jurisdiction.

11

So in the worst case a few hundreds since that’s only for two months (and the German speaking cantons usually have fairly low wealth tax so probably less)

(Plus potential fine on top worst case, but that’s at most a multiple of the amount due)

1 Like
13

I faced the same for 2022 increase as i missed declaring something in 2020 and 2021. So i got the letter from tax authorities and then when i rechecked, i saw the difference. I hired an accountant and they wrote the letter to the authorities and clarified this was a manual error. I clarified the full amount and was open for any tax claims etc. They did charge me some amount but wasnt considered as tax evasion.
Which canton are you in ? I suggest go and talk to a treuhand and use their help.