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Swiss split on vote to keep expat tax break

Published on 23/09/2012

A proposal to abolish special tax breaks for rich foreigners split Swiss voters Sunday, with the canton of Basel-Landschaft approving it but the expat haven of Bern canton rejecting it.

According to official results, 66.5 percent of voters in Bern canton — which includes the village of Gstaad, a renowned playground for wealthy expatriates — opposed scrapping a system under which foreigners pay a lump sum tax on the basis of their spending in Switzerland, instead of their earnings.

Voters in the canton of Basel-Landschaft approved the same measure, but only a handful of expats residing there benefit from the tax break, so the new rules will have little impact.

Still, in the Bern canton, a slim majority approved tightening the tax break, notably by setting the minimum tax amount at 400,000 Swiss francs (330,000 euros, $430,000).

In 2010, the number of so-called “tax refugees” in Switzerland taking advantage of the system stood at 5,445 and they paid 668 million Swiss francs in taxes, or an average of a little over 120,000 euros each.

Basel-Landschaft joins three other cantons that had already stamped out the privilege since 2009.

Most of the Bern canton’s expats who benefit from the system — including French rocker Johnny Hallyday and French-Polish film director Roman Polanski — live in Gstaad, a small ski resort dotted with luxury chalets.

Voters in Gstaad waited anxiously for the results, fearing an exodus of many of its wealthy foreigners if the measure was approved. The canton of Bern has 230 expats benefitting from the break.

Hallyday took up residence in Gstaad in 2006 and, according to the newspaper Le Matin, earned some five million euros ($6.5 million) last year, on which he paid around 575,000 euros in tax, “or what he spends in two months, according to his entourage.”

“These lump sum taxes have become a boon for a lot of trustees,” Socialist lawmaker Margret Kiener Nellen told the Swiss press. “At Gstaad, for example, there are 13 multi-millionaire Greek families that pay ridiculously low taxes. It’s scandalous.”

Zurich’s canton eliminated the system in 2009 — and saw almost half its foreign millionaires leave — followed by northern Schaffhausen and northeastern Appenzell cantons.

The urban canton of northwestern Basel will eliminate the tax break in 2014.

Swiss voters across the country’s 26 cantons also took part Sunday in a referendum on smoking in public places. The measure, which was aimed at tightening existing anti-smoking rules and reducing passive exposure to smoke, was rejected by two in three voters.