Ahead Of The Election, Germany's Rich People Prepare To Move Their Assets To Switzerland

JAKARTA - German millionaires are anxiously awaiting the results of Sunday's German elections, with a potential leftist victory setting them up for moving assets to Switzerland, bankers and tax lawyers say.

If the centre-left Social Democrats (Sozialdemokratische Partei Deutschlands) or the SPD, the Left Party Die Linke and the Greens (Die Grunen), the three coalition favorites are able to win, the reintroduction of wealth taxes and tightening inheritance taxes could be on the political agenda.

"For the super-rich, it's very hot. Entrepreneurial families are very worried," said a tax attorney based in Germany but active in Switzerland, citing Reuters Sept. 24.

The move shows how many wealthy people still see Switzerland as an attractive place to store wealth, despite efforts to erase its image as a billionaire hideout.

No country has more overseas assets than Switzerland and inflows accelerated in 2020, benefiting big banks like UBS, Credit Suisse and Julius Baer. Geopolitical tensions and fears of the economic fallout of the COVID-19 pandemic make Swiss political stability attractive.

Data from the Bank for International Settlements shows that deposits of German households and firms in Swiss banks rose by nearly US$5 billion to US$37.5 billion in the first quarter of 2021, and do not include stocks, bonds or other products. finance.

Newer figures are not available, but sources with knowledge say inflows are continuing.

"I have ordered an above-average amount of new money as in the last three months," said a veteran client adviser at a large Swiss bank that deals mainly with German clients.

"Many rich people, especially businessmen, are worried that there will be a movement to the left in Germany, no matter how the election turns out," said Florian Dürselen, head of Europe at Wealth Manager LGT Switzerland.

Meanwhile, a top Swiss banker said: "I know a number of German businessmen who would like to have a foothold outside of Germany if things get too red (left) there."

A poll on Thursday showed the SPD, which won 25 percent, now only four points ahead of Chancellor Angela Merkel's conservative Christian Democratic Union Party (CDU).

The SPD wants to reintroduce the wealth tax and increase the inheritance tax. The Greens, a potential coalition partner, plan to impose a heavier wealth tax.

Although both envision raising income taxes for high-income earners, a tax on assets will raise more money, tax attorneys say.

He saw increased demand for advice from clients, he said, noting some entrepreneurs had sought to protect themselves by making new investments, through a company in Switzerland or transferring assets to a foundation in Liechtenstein.

Only transferring cash to a Swiss bank account, on the other hand, is no longer helpful. Under immense international pressure, Switzerland now shares the account data with the tax authorities in the client's home country.

"Switzerland as a financial center is characterized by stability, legal security and a high level of financial competence. However, it does not offer any protection against tax evasion," said a spokesman for the Secretariat of State for International Financial Affairs (SIF).

Dürselen from LGT said he recently spoke with a German businessman who fears Germany may soon impose taxes on foreign assets or transactions, boosting the view of Switzerland as a safe haven for capital.

"Personally, I assume that sizable assets will continue to be transferred to Switzerland," he said.

Meanwhile, a local politician said dozens of wealthy German businessmen had asked in recent months about living in one of the low-tax suburbs along Lake Zurich.