Switzerland To Retain Flat Tax For Wealthy Expats

By ExpatBriefing.com Editorial 09 May, 2014

The Swiss National Council has rejected a proposal from the Alternative Left party for an "end to tax privileges for millionaires," which would have withdrawn the flat tax regime for wealthy foreigners.

Lawmakers argued that the system, which is based on the cost of living rather than an individual's wealth or income, makes Switzerland an attractive location for wealthy foreigners, and generates considerable tax revenue for the regions. Nevertheless, the incentive has already been repealed in five cantons.

Switzerland's main trade association, SGV usam, welcomed the outcome of the vote, insisting that the tax scheme is important for the nation's economy. The group said that the regime boosts Switzerland's international competitiveness, increases job creation and preservation, particularly in the outlying regions, and supports small businesses.

About 5,600 wealthy foreigners were taxed according to their living costs in 2012, yielding revenue worth about CHF695m (USD794m). A study conducted on behalf of the Swiss Federal Council showed that these residents spend over CHF1bn each year in Switzerland, generating annual value-added tax (VAT) revenues of between CHF70m and CHF80m.

To guarantee continued support for the regime, the Federal Council has agreed to tighten the regime. From 2016, the tax base for calculating direct federal and cantonal tax will be seven times the cost of living, compared with five times currently. Meanwhile, a minimal taxable income of CHF400,000 will apply for direct federal tax. Swiss cantons will determine their own minimum threshold.

Tags: Tax | Small Business | Business | Tax Rates | Switzerland | Tax Breaks | Trade Association | Trade | Individual Income Tax | Expats |

 





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