The punishment for anything else you could've done on your tax declaration is just money: all the unpaid taxes with interest plus some rather mild fine. In light cases and when they have full cooperation from you after discovering the problem, fine is only 33% of the unpaid taxes.
Maybe it depends on the canton.
Tom
But what about the original question: why should I declare an eigenmietwert for the properties abroad? My tax guys (colfina, btw, highly recommended here) say that I should, unless a family member lives there. But I have been always told (including here), that that is not the case. This website https://www.ch.ch/en/tax-real-estate/ seems to agree: "If you are a homeowner in Switzerland , you have to pay income tax on what is known as its ‘rental value’"
In the end you pay both taxes, though, so you should pay attention to their total
Still, I am not sure whether it's true that I have to declare an income (Ertrag) for an empty flat abroad.
This valuation does not seem to change - we have been on the same level for 8 years. Prior to that in another property the valuation and thus Eigenmietwert remained the same for 10 years.
So yes, 1/3 is possible after a decade or two.
And to answer the original question Eigebmietwert is not applied to properties abroad - their (conservative) value is added to ones total world-wide wealth..
No first hand experience, but I think they do apply it. You don't get taxed for it directly of course, but it affects your tax rate on swiss income.
I wanted to compare the two scenarios of buying a flat in Switzerland vs renting and investing. Let's say a family buys a flat for 1'000'000 with 350'000 equity, 650'000 mortgage. On which amount do they pay the Vermoegenssteuer? How does the Eigenmietwert affect the income tax? Let's say their annual income is 200'000.
This is how I imagine it:
1. OK so for a flat worth 1'000'000 you would pay 3% annually for rent, 30'000.
2. That makes the theoretical income 230'000.
3. Now I'm not sure:
a) will the income tax be paid on the total 230'000 or
b) will the 200'000 only be taxed with the tax rate for 230'000
Please tell me where I'm wrong.
AFAIU, it's a) for a property in CH, but you will be able to deduct mortgage interests from the 30K Eigenmietwert so your income will be less than 230K.
It's added to your taxable income as if you have earned that money. It increases your tax rate and you pay taxes on it. On the bright side, there are no other property taxes to pay here unlike most other countries. Also, 20% of Eigenmietwert can be always deducted as maintenance, no questions asked, more with receipts.
For an apartment in ZH, Eigenmietwert is calculated as 4.25% of taxable value of the property, but before the 70% sale price correction. This taxable value often is up to 3 times lower than market price as people have reported in this thread, especially for older buildings. So, for 1M sale price, old but maintained property, Eigenmietwert should be roughly on the order of ~ 15k. 20% of it you can deduct immediately, so your taxable income would increase only by ~ 12k. Assuming a single high earner in Zürich city, marginal tax rate is 39%, which means 4680 Fr in taxes to be paid for your property. Cheaper in the low tax suburbs. More expensive for new builds.
It's a), but remember that you can always deduct at least 20% for maintenance, so you'll actually pay taxes on 224k.
You can also always deduct mortgage interests in addition. It's not related to Eigenmietwert in any way. Effectively, this makes mortgage cheaper by your marginal tax rate.