Germany shares unprecedented offshore property data with Indian government

The information, obtained under the 'spontaneous exchange of information' clause in the Double Taxation Avoidance Agreement between the two countries, has sparked widespread action by tax authorities

ermany has shared with India its largest cache of sensitive data, revealing the ownership of thousands of properties in the Gulf region by Indian nationals, The Economic Times reported. 

 

The information, obtained under the ‘spontaneous exchange of information’ clause in the Double Taxation Avoidance Agreement (DTAA) between the two countries, has sparked widespread action by Indian tax authorities.

 

The data includes details of over 1,000 Indians holding properties in Dubai and other cities in UAE. Since late October, the Income Tax Department has issued notices across 14 cities, including Mumbai, Delhi, and Bangalore, based on these revelations. The data reportedly surpassed the scale of the 2011 HSBC Swiss accounts leak shared by France.

 

As per The Economic Times report, while the origins of the data remain unclear, its authenticity has led to swift action. Experts believe the data stems from financial institutions or intermediaries obligated to report under the Common Reporting Standard. “This is the largest and most significant offshore asset data shared with Indian authorities,” said Siddharth Banwat, partner at S Banwat & Associates LLP.

 

Global tax cooperation rattles property market

 

The move highlights increasing global cooperation against tax evasion, though concerns remain over the legal grounds for obtaining such information. Taxpayers who did not disclose UAE properties could face hefty fines and penalties under the Black Money Act, introduced in 2015. Depending on their compliance history, tax liabilities could reach up to 30 to 120 per cent of the current market value of undeclared properties, coupled with a 90 per cent penalty.

 

The development has rattled Dubai’s property market, with UAE officials reportedly seeking clarity on the source of the data. Meanwhile, the Director General of Income Tax is preparing reports for the Central Board of Direct Taxes, due in January, outlining actions taken so far.

 

Spontaneous exchange of information under DTAA

This refers to the spontaneous exchange of information regarding a taxpayer’s tax liability, where one of the contracting country’s tax authority, while administering its own tax laws, provides information it believes will be of interest to the other contracting country, even without the latter having asked for it.