To avoid a looming wealth tax increase in Norway, real estate magnate Tord Kolstad relocated to Switzerland two years ago. However, he now faces new challenges in his adopted country.
Switzerland is currently embroiled in a heated debate over a proposed inheritance tax targeting the ultra-wealthy. The proposal suggests taxing half of any wealth exceeding 50 million francs ($59 million) upon inheritance. This has sparked public concerns from affluent business owners and billionaires who warn they may move their assets elsewhere.
Globally, similar discussions are unfolding as governments seek to raise revenue from the wealthiest to address large deficits and fund public services. Critics argue that such measures could drive away wealthy individuals and diminish investment.
In Switzerland’s system of direct democracy, the inheritance tax proposal will be subjected to a national vote in about two years. The very proposal is causing anxiety about Switzerland’s identity, following recent concerns about the stability of its financial sector post-Credit Suisse collapse and challenges to its traditional neutrality. The inheritance tax debate threatens Switzerland’s image as a low-tax, business-friendly haven.
Known for its private banking sector and as a haven for the wealthy, Switzerland houses UBS Group AG, the world’s largest wealth manager, and prestigious Alpine resorts like St. Moritz and Gstaad.
Kolstad, who left Norway after the Socialist government nearly doubled wealth tax rates, expressed concern over the potential impact of the proposed tax on business owners. “Even though I’m very happy in Switzerland, I would have to reconsider if this goes through,” Kolstad remarked.
Switzerland is home to 22 of the world’s 500 richest individuals, according to the Bloomberg Billionaires’ Index. Isabel Martínez, a senior economist at KOF ETH Zurich, estimates around 2,500 taxpayers with wealth exceeding 50 million francs, contributing 5-7 billion francs annually, or about 6% of income, profit, and capital gains tax revenue.
Currently, Switzerland does not have a federal inheritance tax. Some cantons impose inheritance taxes, but typically exempt spouses and children, with tax rates no higher than 3.5% after generous exemptions.
Despite the proposal being some time away from potential implementation, it remains a contentious issue. The youth wing of the Social Democrats, known as the Juso, spearheaded the initiative to fund climate measures, gathering over 100,000 signatures to call for a national vote on the higher inheritance tax.
