The Swiss tax haven and (V)HNWIs
Switzerland is one of the most desirable, sought-after locations for residence among the very wealthy and HNWI set.
The wealthy have numerous options for domiciliation, and each has its particular attractions. There are ‘wonderful locations’, areas with favorable tax laws, places with an especially welcoming culture. The particularity of Switzerland is that it already resembles the way a country would look if the Wealthy were allowed to design one. Zürich and Geneva have consistently ranked as the best two cities in the world in which to live, and the Swiss capital, Berne, even placed fifth in 2004.
Switzerland has political and economic stability, a strong currency, a conservative culture, beautiful countryside, mountains and lakes, cosmopolitan cities, numerous sports and recreation activities, low crime rate, and excellent public infrastructure. Of additional importance to the wealthy and famous is the Swiss tradition of discretion and the highly advantageous Swiss tax and immigration laws, which allow for foreign-born HNWI to pay relatively few taxes while experiencing all the advantages of living in Switzerland. Switzerland is among the few countries with a special sensitivity towards wealth and offers an incomparably more refined setting than a Caribbean tax haven with only a few casinos and yacht clubs to show for culture.
Switzerland’s business, living, recreation, and travel opportunities are first-rate and the Swiss tradition of hospitality is highly welcoming. Foreigners notice immediately the care that is lavished on the Swiss public infrastructure, the result of which is highly efficient municipal utilities, schools, roads, and health care facilities, as well as city sanitation.
Most of the country is within 2 hours from one of the three airports in Geneva, Basel or Zürich – and the network of intra-city public transportation on buses and trams meshes seamlessly with the national rail system, providing the working population with an efficient public transport while at the same time scrupulously maintaining the national roadways for private car transport. Numerous small airports for private aircraft are scattered around the country.
The recreational opportunities in Switzerland are vast due to the multiplicity of climates and regions: snow and water sports are among the most common, though boating and yacht racing, as well as golf and other sports are common supported via many private clubs.
The International wealthy usually prefer Switzerland for business opportunities as well its lifestyle advantages appreciated by their families. Zurich and Geneva are international business hubs and London, Paris, Frankfurt or Milan – are all within easy reach of morning and afternoon commuter flights. The available banking and finance services are well-known. Because of its lifestyle advantages, Switzerland attracts an important concentration of highly educated, skilled employees and business partners. There are many engineering and emerging high-tech industries, as well as services and consulting firms. The Swiss environment is also highly multilingual, and it is common to be able to find trilingual secretaries on the local labor markets.
Switzerland underwrites its prosperity in part through a highly favorable tax code which encourages high net worth individuals to settle in Switzerland. The Swiss tax code allows very wealthy people to relocate to Switzerland and enjoy their independence relatively tax-free, without changing citizenship. The tax regulations differ from canton to canton, and the details –which are worked out individually with each applicant– are dependent on one’s country of origin, but very well-off individuals and families always fare better under Swiss tax law than they would in their home countries.
In each region (Zurich - Basel, Geneva - Lausanne - Neuchatel, Lugano - Locarno) there are Swiss firms that specialize in relocation tax law, and they can provide advice and consulting services to analyze your particular situation and determine what you would save if you relocated, as well as organize your move and ultimately secure required residence permits. Some firms have batteries of lawyers who can even negotiate with the Swiss authorities to get you the most favorable tax package.
The delightful thing about Switzerland is that the cantons compete with each other to attract the most desirable HNWIs, and some cantons offer particularly striking options for wealthy retirees. As an example, the canton of Berne has no inheritance tax – thus wealthy citizens are free to pass their assets on to their family—while other cantons like Vaud have very steep inheritance taxes. A legal consulting firm’s advice is highly recommended and pays for itself probably after only a few days residency.
Lump-sum taxation is the other unique and advantageous option for foreign-born HNWIs relocating to Switzerland. It is of particular interest to EU citizens.
The lump-sum option is only for foreign citizens who will not be economically active in Switzerland. It is designed for people or families wealthy enough that they don’t need to work – such as retirees (which includes VHNWIs and billionaires like Bertarelli), or for those whose business is outside of Switzerland. In this kind of arrangement negotiated directly with the Swiss government, an annual payment is agreed upon, and is based on your standard of living in Switzerland (how much you will spend, the size of your house, etc.), not on your financial assets or revenues. This formula allows for considerable financial privacy because it does not require disclosure of income or assets, usually also means enormous annual savings. Some countries (for example Germany and the United States) levy exit taxes on individuals who wish to relocate, but the savings involved in a lump-sum or other Swiss tax ruling anyway make the move worthwhile.
