Famous tax haven for millionaires loses its shine

Geneva - The number of wealthy foreigners benefiting from a century-and-a-half old Swiss tax break declined last year for the first time since 1999, amid a debate whether to abolish the regime.

Foreigners with a “forfait” tax arrangement declined to 5 382 at the end of 2014, compared with 5 634 in 2012, the Conference of Cantonal Finance Directors said in a statement this week.

The amount of tax collected nonetheless rose to 740 million Swiss francs ($777m), from 695 million francs in 2012, according to the statement. The conference, which represents regional governments, collects figures every two years.

Swiss voters in a referendum in November refused to give up the tax break used in particular by wealthy exiles in Geneva, other cantons in western Switzerland, and Ticino, the Italian-speaking part of southern Switzerland. Fifty-nine percent voted against the initiative, sponsored by the Socialist Party, after the federal government, cantons and business groups campaigned to preserve cantons’ right to offer a forfait.

The largest contribution from a single forfait holder was 7.8 million francs in 2014, compared with 23.2 million francs in 2008, according to the statement.

The forfait refers to a tax on imputed expenditure that is usually calculated at not less than five times the annual rental value of the individual’s home in Switzerland.

Forfait holders don’t have to declare their worldwide income or assets and, unlike other Swiss residents, they don’t pay tax on income from securities’ holdings. A revised formula may result in higher levies for forfait holders from 2016.