Switzerland: A haven for 'tax refugees'

tax       2002-12-08 
There is a certain type of foreigner who flees to Switzerland and is welcomed with open arms -- the "tax refugee," who sets up home in Switzerland in a bid to escape high tax demands in his or her native land.

Tax refugees have nothing to do with asylum-seekers and are believed to number about 2,500, according to a recent study.

About 1,000 of them are concentrated in one canton (region), the western French-speaking region of Vaud, whose main city is Lausanne, the study by the Zurich-based group Tax Expert International said.

As an unwritten rule, belonging to this club requires having a personal fortune of at least five million Swiss francs (3.4 million euros, dollars) and a comfortable annual income, the group said.

"Foreigners, and especially the Swedes and Finnish, like the region of Geneva Lake a lot because it reminds them of the serenity of their fjords," said an author of an article on the 300 richest people in Switzerland, published this month in the Swiss magazine Bilan.

The regions of Geneva, and Ticino in the Italian-speaking south, each have attracted about 500 hefty foreign fortunes and the rest are split between the regions of Berne -- especially the chic ski resort of Gstaad -- Schwyz, Graubunden, Zurich, Luzern and Zug, in central and eastern parts of the country.

Switzerland reserves a special status for these rich foreigners in granting them a fiscal package. The offer is exclusive to them and not open to Swiss citizens.

They negotiate an arrangement with the Swiss tax authorities allowing them to be taxed on their life style rather than on their real fortune.

German Formula One racing driver Michael Schumacher benefits from such a system. Although his annual income is about 100 million Swiss francs (66 million euros), he only pays two million Swiss francs in taxes, or scarcely two percent annually.

Under Switzerland's decentralised tax system, regional tax authorities have the power to raise or lower taxes, leading to a certain amount of competition between the cantons to attract these 'refugees'.

Foreign tax refugees make up a good third of the latest listing of the 300 richest people in Switzerland, all of whom have at least 100 million Swiss francs, deputy chief editor of Bilan, Olivier Toublan, said.

In the first two top positions are two Swedes, Ingwar Kamprad (15 billion Swiss francs) who heads the Swedish furniture giant Ikea, and the Rausing family (14 billion Swiss francs), owners of the Tetra Laval group, which invented cartons for milk and fruit juices.

Numerous French nationals have hopped across the border to live in the canton of Geneva, including Francois Dalle, former head of the French cosmetics giant L'Oreal, and Roger Zannier who specialises in children's clothing.

To set up home in Switzerland these tax refugees call on specialist lawyers or on banks who offer their services in the hope of gaining the private banking business of these expatriates in exchange.

The Micheloud lawyer's practice in Lausanne for example displays on its internet site statements by clients expressing their delight at their new life in Switzerland.

One wealthy woman from Dijon had just one thing she regretted, having built her chalet in the eastern Swiss region of Graubunden -- that she had not come to Switzerland sooner.