Overseas property? Mind the paper trail

OECD has, at the request from India during its term as the rotating president of G20, set out common reporting standards for real estate ownership and income derived from this asset class. Tax administrations do not have adequate visibility into overseas property holdings, which renders common reporting for financial assets less effective. Governments expect to plug tax leakage through shared data as overseas property ownership rises. The OECD framework covers ownership, beneficial ownership and derived income. This is a comprehensive database that would become available to Indian tax authorities when millionaire migration is on the upswing. Tax jurisdictions share information on request, but they are limited by the diversity of reporting requirements around real estate. The picture gets cloudier when overseas property is held through corporate intermediaries, where identification of the ultimate owner takes some effort.

The reporting structure planned relies on self-declaration, which will add to the compliance burden of HNIs holding or planning to buy property in OECD member states. Some of these countries are reworking their strategy of using property ownership to encourage affluent immigration. The shadowy nature of offshore real estate deals has contributed to their poor image among residents, who also smart under rising property prices despite stable or declining populations. Tax transparency should help restore public perception about property ownership by non-residents. This affects the reputation of affluent Indians, who are big investors in cities like Dubai. OECD reporting requirements have a bearing on European nations in need of immigration to arrest demographic declines.

During its G20 presidency, India pushed for multilateral reporting of crypto assets, much like offshore real estate. OECD has followed suit. These moves boost India's reputation for constructive, conservative regulation in global markets.