Article on German Wealthy Renewed Interest in Swiss Financial Institutions Because of Potential Tax Increase (9/26/21)

This is an interesting phenomenon about German wealthy fearing higher taxes to try to move and hide assets (and related taxable income).  See Oliver Hurt, German millionaires rush assets to Switzerland ahead of election (Reuters 9/24/21), here. 

Some excerpts:

ZURICH, Sept 24 (Reuters) – A potential lurch to the left in Germany’s election on Sunday is scaring millionaires into moving assets into Switzerland, bankers and tax lawyers say.

If the centre-left Social Democrats (SPD), hard-left Linke and environmentalist Greens come to power, the reintroduction of a wealth tax and a tightening of inheritance tax could be on the political agenda.

“For the super-rich, this is red hot,” said a German-based tax lawyer with extensive Swiss operations. “Entrepreneurial families are highly alarmed.”

The move shows how many rich people still see Switzerland as an attractive place to park ealth, despite its efforts to abolish its image as a billionaires’ safe haven.

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The SPD wants to reintroduce a wealth tax and increase inheritance tax, while the Greens – a likely potential coalition partner – plan to tax fortunes more heavily. Although both envision raising income tax for top earners, a tax on assets would raise much more money, the tax lawyer said.

He was seeing increased demand for advice from clients, he said, noting some entrepreneurs had sought to protect themselves by making new investments through a company in Switzerland or transferring assets to a foundation in Liechtenstein.

Simply transferring cash to a Swiss bank account, on the other hand, no longer helps. Under immense international pressure, the Swiss now share such account data with tax authorities in clients’ home countries.

“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,” said a spokesperson for the State Secretariat for International Financial Matters (SIF).

Some questions

 1. If all the wealthy are looking for is financial stability as opposed to hiding assets from the tax authorities (or girlfriends, etc.), then why is Switzerland more stable than other countries, most prominently the U.S.?

2. Is there a similar phenomenon among U.S. taxpayers to continue to try to exploit whatever benefit they now perceive in Swiss financial institutions are a place for their wealth?

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