by Switzerland faces competition to attract mobile wealth Keystone / Christian Beutler Listen to the article Listening the article Toggle language selector English (US)
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Switzerland’s wealthiest resident, Gérard Wertheimer, is a French businessman, who has set up home in Geneva. Hundreds more foreign multi-millionaires are expected to follow the example of the Chanel luxury brand co-owner by the end of this year.
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Geopolitical turmoil and regime change in some countries is turbo-boosting the exodus of millionaires from the countries of their birth to more favourable parts of the world, according to Henley & Partners. The relocation specialist firm forecasts the arrival of some 1,500 footloose millionaires in Switzerland.
A surge of wealth migration will result in 128,000 millionaires switching residence, states the Henley Private Wealth Report 2024. Some will leave their home regions because of conflict or oppressive regimes; others will be driven away by sanctions, and some will simply be seeking a less onerous tax burden.
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“Anyone who has built up assets wants to preserve them for their family. Security is therefore a decisive factor,” Swiss financier Eric Sarasin told the NZZ am Sonntag newspaper. “While political tensions are increasing almost everywhere, I see Switzerland as an oasis of stability.”
Record wealth exodus
Never before have so many multimillionaires upped sticks to seek a better home in a single year, says Henley & Partners.
Switzerland, as the world’s largest offshore wealth hub, has long advertised itself as a home-from-home for the richest people on the planet. The Alpine state offers stable governance, an idyllic landscape, the ability to live incognito and generous tax breaks for the wealthy.
Over the decades, rock stars, sports personalities, successful entrepreneurs and other well-heeled foreign individuals have been welcomed by various Swiss cantons, which bend over backwards to entice them in.
Two years’ ago, dozens of the richest Norwegians came to Switzerland to escape changes in their country’s tax regime. Many more wealthy exiles are now being tipped to leave Britain after the new government decided to change the tax status of wealthy immigrants. The Netherlands and France are also discussing ways to squeeze more tax revenue from their wealthiest residents.
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UBS bank predicts a 17% drop in the number of British-based millionaires by 2028.
“We’re getting more requests [from wealthy people in Britain] each week — and many more than we experienced last year,” Stefan Piller, head of tax and legal at tax advisory firm BDO’s Zurich office, told the Financial Times in September.
Opponents of wealth
But Switzerland is facing tough competition from other countries to attract wealthy people (see graph). The United Arab Emirates is proving an effective magnet for rich Russians and Indians. Singapore and Australia are reeling in Asian millionaires at a fast pace.
In Europe, Portugal and Italy have adapted their tax systems to attract more affluent residents.
Switzerland is still viewed as an attractive venue for the wealthy but is not quite as generous as before. The 2007/8 financial crisis prompted the government to tighten the rules that govern special ‘lump sum’ tax breaks offered by cantons. Some cantons, such as Zurich, voted to ban the practice altogether.
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Wertheimer family remains richest in Switzerland
And in any case the special tax status forbids beneficiaries from earning incomes from operations abroad, which rules out current entrepreneurs from taking advantage of the tax breaks.
But for some people, Switzerland is still being far too generous to the rich. Earlier this year, the Young Socialists – the youth wing of the country’s left-wing Social Democratic Party, launched a popular initiative calling for a 50% inheritance levy to be imposed on the wealthy to help finance climate protection measures.
Opponents complain that such a tax would destroy Switzerland’s allure for rich foreigners.
Edited by Reto Gysi von Wartburg/sb
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