The Swiss wealth tax and your Indian assets

Switzerland is one of the few countries that still taxes wealth, not just income. There is no federal wealth tax, but the cantons and communes levy one, and it applies to your worldwide net assets, not just Swiss ones. So your Indian bank balances, whether NRE, NRO or FCNR, your Indian shares and your mutual-fund units all go into the Swiss wealth-tax base, valued at their market value at the end of the year, with any related debts deducted.

The rates are modest by income-tax standards, ranging from a fraction of a percent up to around 1% depending on the canton, but it is an annual charge on the assets themselves, not their income. Because India abolished its own wealth tax in 2015, there is no Indian wealth tax to set against it, so this Swiss charge on your Indian assets stands alone. It catches people who think of their Indian holdings as a separate world; for a Swiss resident, they are part of the annual wealth declaration.

Property gets its own treatment, mirroring the income side. Your Indian real estate is excluded from the taxable wealth base, Switzerland does not levy the wealth tax on the value of foreign property, but, as with the exempt rental income, its net value is still used to set the rate that applies to your other, taxable wealth. So the Indian property is not directly taxed by the Swiss wealth tax, but it can push up the rate on your Indian deposits, shares and funds.

So the picture is two-tier: Indian movable assets, deposits and securities, are in the wealth-tax base and taxed; Indian real estate is out of the base but raises the rate. The practical work is an accurate year-end valuation of your Indian assets and the property, in the right form for the Swiss declaration, so nothing is missed and the rate is not overstated. A practising CA on the India side provides the balances, holdings and property value your Swiss accountant needs for the wealth-tax return.