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Lawyers and bankers in Switzerland are sounding the alarm over a potential exodus of the wealthy ahead of a referendum on a 50 per cent inheritance tax for the super-rich. The Alpine nation is set to hold a popular vote in November on the implementation of a federal tax on inheritances and gifts exceeding Sfr50mn ($61mn). Unlike current cantonal duties that would still be applicable, the proposal does not include an exemption for spouses or direct descendants.
The impending vote follows in the footsteps of the UK, which triggered a wave of wealthy foreigners leaving the country by subjecting the global assets of non-domiciled residents to inheritance tax—a move that is now being reconsidered. Meanwhile, jurisdictions like Dubai and Italy are actively courting the affluent.
“In terms of Switzerland’s ability to attract individuals leaving the UK, the damage has already been done. The timing couldn’t have been worse,” remarked Georgia Fotiou, a private client advisor at Staiger Law. “While it hasn’t deterred everyone from coming, more individuals have opted for Italy, Greece, the United Arab Emirates, and other destinations instead.”
The proposed tax was put forth by the far-left Young Socialists party in 2022 as a means to generate revenue for addressing the climate crisis. According to Swiss law, such proposals are subject to a public vote if they garner 100,000 signatures.
“The mere existence of this proposal creates unnecessary uncertainty as the entire country must vote on it,” stated Frédéric Rochat, managing partner of Geneva-based Lombard Odier. “It’s unhelpful.”
Peter Spuhler, the owner of Stadler Rail, a major rolling stock company, and one of Switzerland’s wealthiest individuals, publicly criticized the proposal, labeling it “disastrous for Switzerland” and expressing concern that his heirs could potentially owe up to SFr2bn.
The introduction of the new tax poses a risk to Switzerland’s reputation for stability, which has already been marred by the downfall of Credit Suisse and the implementation of new financial regulations.
“The proposal is extremely damaging, especially for larger family businesses that we advise,” remarked Stefan Piller, head of tax and legal at BDO in Zurich.
If implemented, the new levy would place Switzerland ahead of other jurisdictions like Italy, where inheritance taxes range from 4 per cent to 8 per cent, as well as Dubai and Hong Kong, which have no inheritance or gift tax.
Business advocacy group Economiesuisse cautioned that the initiative “jeopardizes Switzerland’s standing as a reliable and stable business hub globally.”
As the referendum draws near, some individuals are already leaving Switzerland, while others are reconsidering plans to relocate to the country.
“We’ve witnessed Swiss-based families choosing to relocate before the vote, and overseas clients opting against moving here due to the uncertainty surrounding the proposal,” stated Rochat.
While some wealthy individuals are diverting their funds to Switzerland amidst global volatility, others are taking a wait-and-see approach.
Christian Kälin, chair of Henley & Partners, a consultancy specializing in citizenship and residency through investment, believes that Switzerland’s appeal remains intact. He emphasized that the country’s reputation for stability will likely endure.
Although the federal council and both houses of parliament have rejected the proposal, experts believe it has slim chances of passing in the November 30 referendum, given the Swiss population’s historical aversion to wealth taxes. To be approved, the proposal must secure majorities in both the population and the country’s 26 cantons.
Nevertheless, Rochat cautioned that if the proposal narrowly wins or loses, the issue may resurface in the future, undermining Switzerland’s predictability. “It must be decisively voted down to put this possibility to rest for the next two decades.” The world of fashion is constantly evolving, with new trends emerging every season. One trend that has been gaining popularity in recent years is sustainable fashion. Sustainable fashion focuses on creating clothing and accessories in an environmentally and socially responsible way, without compromising on style or quality.
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