ZURICH (Reuters) - Many of Switzerland’s foreign millionaires will be watching nervously on Sunday as voters decide whether or not to scrap one of the country’s biggest tax perks for expatriates.
Switzerland’s system of charging foreign residents with no gainful activity in the country a lump sum based on their living expenses, instead of taxing assets or income, has helped make it a popular home for the super rich.
Five Swiss cantons including Zurich have abolished the lump-sum tax, but the left-wing Social Democratic Party gathered the necessary 100,000 signatures to force a vote on doing away with it at the national level.
The “Stop the tax privileges for millionaires (abolition of lump-sum taxation)” campaign has been conducted largely in the shadow of two other initiatives up for a vote on Nov. 30 — introducing limits on immigration and boosting Switzerland’s gold reserves.
But high-profile Swiss residents like Formula One chief Bernie Ecclestone and Russian billionaire Viktor Vekselberg will be following the tax result closely. A ‘yes’ vote could see them hit with higher tax bills.
French tennis players who live in neighboring Switzerland, including Jo-Wilfried Tsonga, caused a stir by incorrectly answering questions about Switzerland, such as its capital Berne, in a quiz conducted by French sports newspaper L’Equipe last week.
Polling by Berne-based research institute gfs.bern suggests the tax initiative will likely be rejected, with many voters concerned about the economic implications of a ‘yes’ vote. Switzerland pocketed 695 million Swiss francs ($717.53 million) from the tax in 2012.
Scrapping the tax, introduced to attract wealthy pensioners to Switzerland, would be the latest blow to the country’s status as a tax haven. Switzerland effectively ended its long-cherished banking secrecy in May by agreeing to join other countries in sharing tax information.
If the lump-sum charge were scrapped, accounting firm KPMG Switzerland’s head of international private client services said many wealthy foreigners would seek a better tax deal elsewhere.
“Some of our clients, I assume, would stay in Switzerland, the ones that are really personally attached to Switzerland, that enjoy the Swiss lifestyle,” Frank Lampert said.
“Others, I’m quite sure, would leave Switzerland because their main consideration when choosing Switzerland was to find a mild tax regime.”
Additional reporting by Oliver Hirt; Editing by Janet Lawrence