Switzerland’s Tax Haven’s Popularity Surges Says HSBC

A concerted effort has been put into forcing tax havens of the world to cooperate with reporting requirements as laid down by the Organisation for Economic Cooperation and Development, (OECD).  G20 nations, the European Union and individual but powerful voices from the likes of the US and the UK have all been putting their weight and influence behind the push to make nations such as Switzerland much more compliant in terms of reporting requirements.

As a direct result, the most significant tax havens in the world such as Switzerland have been working with the legislation to make it effective for them, their residents and their continued appeal as an offshore financial centre, whilst at the same time doing all they are required to to remain off the OECD’s blacklist of uncooperative havens.

As a result of the balance Switzerland is continuing to maintain, its popularity as a tax haven is surging according to HSBC’s Swiss private banking arm.  Interestingly enough, Britons are among those flocking to Switzerland to escape higher taxation at home…so what does this haven have to offer?

Switzerland has been famous as an offshore tax haven for generations.  It’s banking secrecy, attractive taxation rates for high net worth individuals, the country’s neutrality and natural appeal have all added up to make it a destination where wealthy individuals and corporations have been happy to bank, invest, do business and even reside.  However, when the US began cracking down heavily on institutions within the nation for allegedly shielding American tax evaders, the future of Switzerland as a tax haven was in serious doubt.

Pressure was then further applied by the Organisation for Economic Cooperation and Development to force the reporting of banking and taxation details of those using Switzerland for alleged criminal activity such as tax evasion – and it seemed that the nation would have to capitulate and practically come back onshore in tax terms.

However, the nation has worked very carefully to strike the right balance between transparency in the fight against global fiscal crimes such as money laundering, and in maintaining the country’s position as an effective place to reside and bank if one is high net worth and one wants to secure one’s position favourably.

According to Alexandre Zeller, the CEO of HSBC’s Swiss private banking arm, Switzerland’s popularity amongst international high net worth individuals is prospering as countries around the world seek to impose ever higher rates of taxation on their citizens.

For example, since the UK announced that it would be levying 50% tax on those who earn over £150,000 from April next year, there has apparently been a high increase in the number of seriously wealthy Britons seeking taxation refuge in Switzerland.  On paper the Swiss tax rates don’t look particularly favourable – however, the higher wealth you are and as long as you don’t generate that wealth in Switzerland, the easier it is for you and your legal and banking team to negotiate an individual tax residency status deal in Switzerland. 

The likes of Michael Schumacher and Tina Turner have done it, Phil Collins did it too, and according to HSBC, Switzerland has never had it so good in terms of the numbers of the wealthy elite who are seeking to set up home in the Federal Republic.  Property prices are soaring, and according to Zeller from HSBC’s Swiss private banking arm: “we’re talking about people with a certain wealth[…]it’s significant.  They come above all from countries which have substantially increased taxes.  There’s a direct correlation between taxes and the desire of a wealthy person to want to establish themselves elsewhere.”

Because wealthy residents of the Federal Republic who don’t have any Swiss income can negotiate themselves an individual tax deal with the regional authorities, if you’re a high net worth or high earning citizen of any nation other than the US, (American citizens are generally liable to US taxes no matter where they live abroad), take a look at what Switzerland has to offer you in terms of greater taxation fairness.