Today's comment is by Bob Bauman, our Legal Counsel and Long-time Editor of The Sovereign Society.
Dear A-Letter Reader,
What is it with the rest of Europe, (or the world, for that matter), when it comes to Switzerland?
The European Union, in particular, just won't leave the Swiss alone, especially when it comes to taxes. Swiss leftist politicians, a definite minority in a nation where the conservative Swiss Peoples Party got the largest percentage in the last elections, love to join with leftist foreigners demanding higher taxes. And keep in mind that Switzerland is not even a member of the EU. Swiss voters have rejected that unhappy notion repeatedly.
So this week comes news reports that the minority Swiss left, parroting complaints from the EU, is trying to abolish a system that, for over half a century, has attracted wealthy foreigners to make their home in Switzerland in return for a special tax deal, called a "forfeit."
That deal is currently available to 3,600 foreigners who pay an average 75,000 Swiss francs (US$60,050) each in tax, earning Switzerland 300 million Swiss francs (US$240.2 million) per year. The system allows foreign citizens living there to negotiate a fixed tax rate based on their Swiss property factors, excluding income earned outside Switzerland. Deals vary widely among the 26 cantons, but the basic formula is to calculate a minimum of five times the annual rent or the rental value of the expatriate's home and his living expenses. That amount is taxed at an average rate of 30%. (Worth noting -- many nations entice foreigners as individual or corporate residents by exempting them from all or most taxes, including the United Kingdom, Monaco, Luxembourg, Austria and Ireland.)
Only last month EU bureaucrats were attacking Switzerland, claiming low corporate tax rates in the Swiss cantons are a subsidy. A Swiss official got to the core of the issue by explaining that low tax rates are not a subsidy and Switzerland would not raise corporate taxes to satisfy the tax hungry EU.
Three years ago the big EU anti-Swiss campaign was a demand that banking secrecy, written into Swiss law in 1934, be abolished. The French and German governments even went so far as to call for a financial boycott of Switzerland unless they surrendered on bank secrecy. The Swiss said "no" and they meant it. When they finally agreed to collect taxes under the "EU tax directive," it was without revealing the names of any foreign person with a Swiss bank account. The EU's own members, Austria, Belgium and Luxembourg, supported Switzerland's stance by taking the same position in defense of their own bank secrecy laws.
Truth be told, Switzerland has resisted, valiantly, pressures that other, less resolute nations, could never have withstood. Much of that owes to the nature and independence of the modern day descendants of the original Helvetian tribes -- and their inherited financial DNA. But another, and a most important reason, is that Switzerland controls trillions of dollars, euros, Swiss francs -- probably more than one third of all the world's assets -- and money does more than talk. Quietly and successfully that kind of wealth can and does resist the likes of EU bureaucrats.
Rob Vrijhof, a leading Zurich investment manager who serves on The Sovereign Society Council of Experts, points out that "..many of the attacks on Swiss bank secrecy in the name of 'justice' are, in truth, attempts to eliminate cross border competition, to impose an international tax cartel, or to undermine Switzerland's recognized status as a world financial center easily competing with the City in London or with Wall Street. None of that is going to happen."
We will have more to say about these latest attacks by the Left on sensible Swiss tax and financial policies, both from without and within. For the moment, I can predict with confidence that the Swiss forfeit tax deal will not be repealed and Swiss corporate taxes won't be revised to satisfy the EU.
The important point here is the unyielding determination of the Swiss not to be dictated to by the EU Brussels bureaucrats. For years they have stood by their guns under a barrage of attacks from the EU, the Organization for Economic Cooperation and Development (OECD) and other assorted leftists. That says something about the Swiss, and about both the nation's past and future as an asset protection and offshore financial haven.
Here at The Sovereign Society we continue to rank Switzerland as the world's foremost all-around financial haven. And it's still true.
That's the way it looks from here,
BOB BAUMAN, Legal Counsel
P.S. We're bound for Switzerland this June for our European Advantage Tour. You're invited to join us as we tour Switzerland's trendiest cities, from the busy financial district of Zurich to the quiet mountain resort of Zermatt. And along the way, you'll hear the latest asset protection and investment secrets from leading financial experts around the globe. Our last European Tour sold out quickly, so if you're interested, call Value Holidays today to reserve your spot at 1-800-558-6850. Or for more information, check out our upcoming events .