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Swiss lawyers and bankers have warned of the British-style departure of the wealthy people ahead of the referendum on the 50% inheritance tax on the ultra-rich people.
The Alpine Nation will be popular vote in November on the introduction of federal taxes on inheritance and gifts over SFR50MN ($610,000) in inheritance and gifts. Unlike existing canton obligations that still apply, the proposal does not include exemptions for spouses or direct descendants.
The looming vote comes after the UK has sparked a rush for the exit of wealthy foreigners by holding the global assets of non-dominant residents responsible for inheritance taxes. Meanwhile, jurisdictions such as Dubai and Italy have stepped up efforts to seduce the rich.
“The damage has been done in terms of the opportunity for Switzerland to attract people leaving the UK. The timing was terrible,” said Georgia Fotiou, an attorney who advises private clients at Staiger Law. “We haven’t stopped anyone coming, but instead we chose Italy, Greece, the unified United Arab Emirates, and more.”
This new tax was proposed in 2022 by the young Socialist Party on the far left as a way to raise money to tackle the climate crisis. Under Swiss law, such proposals go to the popular vote if they are supported by 100,000 signatures.
“We’re committed to providing a great opportunity to help you get started,” said Frederic Rochat, managing partner at Geneva-based Lombard Odier. “The simple fact that it exists is useless.”
The proposed tax will affect people who run thousands of small businesses and also have entrepreneurial families spread across the country.
Peter Spooler, the owner of the Rolling Stock Giant Stadler Rail and one of Switzerland’s wealthiest people, publicly condemned the proposal as a “Swiss disaster,” saying his heirs should be handed over as much as SFR2bn.
The new tax outlook further halts Switzerland’s reputation for stability. This has gained several hits in recent years, including the end of Credit Switzerland and the introduction of new financial regulations.
“Switzerland has always been a country with a good environment when it comes to gifts and inheritance taxes. We have some bigger family companies to consult with and they have big problems,” said Stefan Piller, head of law at BDO in Zurich.
New collections place Switzerland on top of other jurisdictions, such as Italy, where succession taxes range from 4% to 8%, or place Dubai and Hong Kong without inheritance or gift tax.
Business Lobby Group Economiesuisse said this week that the initiative is “in danger to Switzerland.”
As the vote approaches, some have already set out, while others have decided to oppose relocation to the country.
Roschatt said Lombard Odier “sees a Swiss-based family that decided not to take a risk and move before the vote,” but his overseas client decided not to move to the country as the “very harmful” proposal created uncertainty ahead of the vote.
Another Zurich-based private banker said that top clients had moved to Liechtenstein before the vote. Because even if the proposal didn’t pass, “the uncertainty about whether there would be something else in a few years made them want to move.”
However, other banks said many wealthy people have been shifting money to shelters for a long time at a time when they are still uncertain.
“We’ve seen a fairly large influx from all over the world at this point, given the global volatility,” said a third executive at a private bank, adding that Americans in particular have stepped up efforts to move money into the country under the Trump administration.
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Christian Kälin, chairman of Henley & Partners, is a London-based consultant specializing in citizenship and residency through investment, and said “we don’t share the view that this has undermined Switzerland’s appeal.”
“I’ve seen people waiting to see the possibility of referrals,” he said. “But frankly, I understand that the people we deal with are intelligent and that Switzerland doesn’t introduce this in a simple way.”
The country’s administrative division, which is the federal council, rejected the initiative, as well as the House of Representatives, and experts in the referendum on November 30th gave the tax success a low possibility, given the historic dislike of Swiss citizens’ wealth tax. To pass, you will need both a majority of the population and a majority of the country’s 26 cantons.
However, Rochat said that if the proposal were won or lost with a small margin, the issue would likely be reconsidered in a few years, which would undermine Switzerland’s predictability. “We need to put this overwhelming majority (where this possibility is possible) in bed for 20 years and vote.”
