German millionaires have been copying their accounts and assets to Switzerland in recent months, fearing the new government elected on Sunday will impose a tax on the rich, introduce an increased inheritance tax and increase the income tax for them. According to reports by bankers and investment managers in Switzerland to the Reuters news agency, there is a “wave of rich Germans” who transfer their money to the country in a way that will protect them from taxation in Germany. Taxation laws vary from canton to canton in Switzerland, but are generally more friendly to multi.millionaires.
Germany faces a possible break to the center.left economic after Sunday’s election. The leading party in the polls is the Social Democrats, led by Olaf Schultz (25%), who promised to raise the income tax for those who earn more than 250,000 euros a year by 3% .4%. The Greens (16%), which is expected to be a coalition partner if Schultz is elected chancellor, is proposing more radical measures, such as a “wealth tax” for the not.so.small tier of German multi.millionaires, including veteran family companies.
Both parties support the application of a more comprehensive “inheritance tax” in Germany. Their possible partnership with the Di Linke party (6%) from the deep left also raises fears among Germany’s wealthy about an entirely new policy.
Recent polls, however, suggest a close race between the Social Democrats and conservatives (23%), who oppose tax increases and are considered more sympathetic to business and the rich.
“The rich are afraid of a tendency to the left after the election”
“Among multi.millionaires, this is a very hot topic,” a German lawyer specializing in taxation and operating in Switzerland told Reuters. “Those who are particularly concerned are Germany’s wealthy families,” he added.
According to the Bank for International Settlements (BIS), German households’ deposits in Swiss banks jumped by $ 5 billion in the first quarter of 2021, to $ 37.5 billion. These figures do not include stocks, bonds or financial products.
They also apparently do not reflect the move of millionaires to secure their money outside of Germany, which is usually done through investment in local companies or assets in Switzerland or Liechtenstein funds, and not as bank account deposits that Switzerland is required to present to the German authorities.
Still, according to a number of bankers and investment advisers, the phenomenon exists under the radar. “I have brought in a larger amount of money from customers than average in the last three months to the bank,” an investment adviser at a Swiss bank told the news agency. “Many rich people, especially entrepreneurs, fear there will be a tendency to the left after the election, no matter even what the results will be,” said LGT’s investment director in Switzerland. Another banker told the agency: “I know Germans who want to have one foot in Switzerland if things turn too red there.”