Swiss Expert Warns Against 'Fatal' IHT Initiative
by Ulrika Lomas, Lowtax.net, Brussels
28 February, 2014
Swiss tax expert Maja Bauer-Balmelli has warned that adoption of the Socialist Party's inheritance tax initiative would prove "fatal" for Switzerland's economy and wealth management industry.
In an interview with Le Temps, Bauer-Balmelli pointed out that descendants are not currently subject to inheritance tax in most cantons in Switzerland. In contrast, the initiative provides that only a spouse or registered partner would be exempt from taxation, while other beneficiaries would be taxed at a rate of 20 percent above a threshold of CHF2m (USD2.25m). Inherited wealth is already subject to taxation as profit or as income, Bauer-Balmelli said.
According to Bauer-Balmelli, the initiative is "unjust" and ill-conceived, and cantons are concerned that the proposals will either lead to an exodus of foreign entrepreneurs, or stem this type of immigration. Although the initiative has not led to a flight of companies and individuals abroad as yet, discussions indicate that such preparations are being made, Bauer-Balmelli said.
Under the plan, submitted on February 15, 2014, a federal inheritance and gift tax of 20 percent would be levied on inheritances in excess of CHF2m and on gifts of over CHF20,000 annually, to secure financing for the AHV social security and pension fund.
On a separate note, Bauer-Balmelli said that Switzerland should reject the new inheritance tax agreement concluded with France, even though France plans to terminate the existing 1953 accord.
The new deal brokered with France is not in accordance with OECD standards, Bauer-Balmelli said, drawing attention to one provision that states that if the deceased dies in France, any property held in Switzerland will be taxed in France. This provision is simply "unacceptable" and contrary to international principles, she said, surmising that if Switzerland bows to France's demands other countries will follow suit. It is therefore imperative to defend Switzerland's interests and to comply with international standards, she ended.
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