Schweizerische Nationalbank : Swiss Say Foreign Millionaires Still Welcome After Vote

Author:Alliance Trust Group
Profession:Alliance Trust Group

Swiss voters refused to give up a 152-year-old tax break for rich foreigners in Geneva and other wealthy areas that the government says helps the economy.

Fifty-nine percent voted against an initiative, sponsored by the Socialist Party, that would have abolished a system allowing foreigners to duck income and wealth taxes by negotiating lump-sum payments with Swiss cantons, the government said yesterday. Two other proposals, on the Swiss National Bank's gold holdings and on immigration limits, also were rejected.

The Swiss government has said abolishing the regime known as the "forfait" would have cut tax receipts and led to job losses as wealthy exiles left Geneva and other French-speaking cantons that are home to most beneficiaries. Four-time Formula 1 champion Sebastian Vettel and Russian billionaire Viktor Vekselberg are among those benefiting from the system.

"This was a very clear rejection of a left-wing, anti-rich initiative," Thierry Boitelle, a lawyer at Geneva law firm Bonnard Lawson, said in a telephone interview. "Wealthy immigrants will feel more welcome after the vote. There could be a couple of hundred people waiting to arrange a forfait in western Switzerland."

Four of the country's five governing parties opposed abolishing the tax break, originally created in 1862 to encourage British expatriates to contribute to local services. More than 5,600 wealthy foreign residents paid 695 million francs ($720 million) through the forfait in 2012, according to government figures.

Switzerland's Allure

There are more than 700 such regimes in Geneva and 1,400 in the neighboring canton of Vaud. Valais, which includes the ski resorts of Verbier and Zermatt, has 1,300, according to the figures. Six of the nation's 26 cantons, including Zurich, have abolished the forfait since 2008 as an economic slowdown triggered a backlash against the lower tax rates paid by rich foreigners.

When Zurich became the first canton to end the tax break in 2009, 97 of its 201 forfait holders left. Those who remained paid 30 million Swiss francs of tax in 2010, 6.3 percent less than the revenue raised from the lump-sum payment in 2008, cantonal figures show.

"I have five clients who were ready to leave if this initiative had passed," Jean-Blaise Eckert, a lawyer with Lenz & Staehelin in Geneva, said yesterday. "We have been exchanging messages and we are all relieved. People have voted to preserve Switzerland's allure."

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