Geneva targets the high earners set to take flight

Geneva targets the high earners set to take flight

By Haig Simonian in Zurich

Published: February 13 2008 02:00 | Last updated: February 13 2008 02:00

Switzerland's cantons are targeting high-earning non-domiciled executives in the UK to exploit the government's planned tax crackdown on wealthy foreigners.

The move comes as the Swiss government this month convened an expert committee to examine measures to improve Switzerland's attractiveness as a financial centre. Among issues on the agenda are tax changes to boost competitiveness, particularly to win back hedge fund managers from London.

Pierre Jaquier, head of economic promotion for Geneva, said his organisation had stepped up marketing in the UK because of recent uncertainties.

He confirmed Geneva, one of Switzerland's most popular areas for rich foreigners and the heart of private banking, had reinforced its efforts "for specific niches" such as hedge fund managers. "We were always active in the UK, but we have filled out our presence," he said.

Geneva is seen as one of the biggest beneficiaries should the UK tax moves prompt an exodus. The city has a cosmopolitan culture, good infrastructure and high quality lifestyle, as well as a willingness to strike one-off tax deals with expatriates.

Separately, Zug, an ultra low-tax canton near Zurich also very popular with foreigners, reported increased interest from UK professional advisers examining options for clients. "We have received more inquiries from such intermediaries," said Peter Müllhaupt of Zug's economic promotion team.

Lawyers and professional advisers in Geneva and Zurich have reported more interest, especially as further details of the planned crackdown have emerged in the past three weeks.

"There has been a marked increase in inquiries," said Peter Gutzwiller, a counsel at Lenz & Staehelin, Switzerland's biggest legal practice for private clients. "London firms are getting nervous calls from their clients."

The comments come amid anecdotal evidence of cold calling by some Swiss cantons at high-profile companies, such as hedge funds and private equity groups, seen as among the most attractive targets for relocation to Switzerland.

No one concerned would reveal names, or even the status, of their clients. But lawyers said the greatest interest had come from wealthy Europeans, resident but not domiciled in the UK, who would have the least difficulty gaining residence permits in Switzerland.

Swiss cantons are allowed to strike one-off tax deals with wealthy foreigners on the basis they generate no income in Switzerland. Under such arrangements, now covering about 3,000 people, expatriates pay a lump sum annual tax, usually based on about five times their outgoings.

Foreigners involved in such deals paid an average SFr75,000 (£34,680) in tax a year. Although that is similar to the £30,000 proposed in the UK, the Swiss figure is comprehensive and involves no further levies on income brought into the country.