German millionaires rush assets to Switzerland ahead of election
25 September, 2021, 4:13 pm
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 wealth, despite its efforts to abolish its image as a billionaires’ safe haven.
No country has more offshore assets than Switzerland and inflows accelerated in 2020, to the benefit of big banks such as UBS (UBSG.S), Credit Suisse (CSGN.S) and Julius Baer (BAER.S). Geopolitical tensions and fears of the COVID-19 pandemic’s economic fallout made Switzerland’s political stability attractive.
Bank for International Settlements data show deposits of German households and companies at banks in Switzerland climbed almost $5 billion to $37.5 billion in the first quarter of 2021, and this does not include shares, bonds or financial products.
More recent figures are not available, but insiders say the inflows have continued. “I have booked an above-average amount of new money as in the past three months,” said a veteran client adviser at a large Swiss bank who deals mainly with Germans.
“Many wealthy people, especially entrepreneurs, fear that there will be a lurch to the left in Germany – no matter how the elections turn out,” says Florian Dürselen, head of Europe at wealth manager LGT Switzerland.
One top Swiss banker said: “I know a number of German entrepreneurs who want to have a foothold outside Germany if things get too red (leftist) there.”
TAX ON ASSETS
A poll on Thursday showed the SPD, on 25%, leading outgoing Chancellor Angela Merkel’s conservatives by four points.
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.