© Reuters. FILE PHOTO: Women loosen up on the banks of Lake Zurich on a sunny spring day, because the unfold of the coronavirus (COVID-19) continues, in Zurich, Switzerland March 23, 2021. REUTERS/Arnd Wiegmann/
By Oliver Hirt
ZURICH (Reuters) – A possible lurch to the left in Germany’s election on Sunday is scaring millionaires into shifting assets into Switzerland, bankers and tax attorneys say.
If the centre-left Social Democrats (SPD), hard-left Linke and environmentalist Greens come to energy, the reintroduction of a wealth tax and a tightening of inheritance tax might be on the political agenda.
“For the super-rich, this is red hot,” mentioned a German-based tax lawyer with intensive Swiss operations. “Entrepreneurial families are highly alarmed.”
The transfer reveals what number of wealthy folks nonetheless see Switzerland as a pretty place to park wealth, regardless of its efforts to abolish its picture as a billionaires’ secure haven.
No nation has extra offshore assets than Switzerland and inflows accelerated in 2020, to the profit of massive banks resembling UBS, Credit Suisse (SIX:) and Julius Baer. Geopolitical tensions and fears of the COVID-19 pandemic’s financial fallout made Switzerland’s political stability enticing.
Bank for International Settlements knowledge present deposits of German households and corporations at banks in Switzerland climbed nearly $5 billion to $37.5 billion within the first quarter of 2021, and this doesn’t embrace shares, bonds or monetary merchandise. More current figures aren’t accessible, however insiders say the inflows have continued. “I have booked an above-average amount of new money as in the past three months,” mentioned a veteran consumer adviser at a big Swiss financial institution who offers primarily with Germans.
“Many wealthy people, especially entrepreneurs, fear that there will be a lurch to the left in Germany – no matter how the elections turn out,” says Florian Dürselen, head of Europe at wealth supervisor LGT Switzerland.
One prime Swiss banker mentioned: “I know a number of German entrepreneurs who want to have a foothold outside Germany if things get too red (leftist) there.”
TAX ON ASSETS
A ballot on Thursday confirmed the SPD, on 25%, main outgoing Chancellor Angela Merkel’s conservatives by 4 factors. The SPD desires to reintroduce a wealth tax and improve inheritance tax, whereas the Greens – a possible potential coalition companion – plan to tax fortunes extra closely. Although each envision elevating revenue tax for prime earners, a tax on assets would elevate way more cash, the tax lawyer mentioned.
He was seeing elevated demand for recommendation from shoppers, he mentioned, noting some entrepreneurs had sought to shield themselves by making new investments by way of an organization in Switzerland or transferring assets to a basis in Liechtenstein.
Simply transferring money to a Swiss checking account, then again, now not helps. Under immense worldwide strain, the Swiss now share such account knowledge with tax authorities in shoppers’ house international locations.
“Switzerland as a financial centre is characterized by stability, legal security and a high level of financial competence. However, it does not offer any protection against tax evasion,” mentioned a spokesperson for the State Secretariat for International Financial Matters (SIF).
LGT’s Dürselen mentioned he lately spoke with a German entrepreneur who feared Germany may quickly tax international assets or transactions harshly, which fostered the view of Switzerland as a secure haven for capital.
“Personally, I assume that considerable assets will continue to be moved to Switzerland,” he mentioned. One native politician mentioned dozens of rich German entrepreneurs have inquired in current months about residing in a single of the low-tax suburbs alongside Lake Zurich.