FRANKFURT: Switzerland, which has attracted millionaires ranging from the founder of Ikea, Ingvar Kamprad, to the former Formula One champion Michael Schumacher, granted foreign residents a six-month reprieve on Friday from any toughening of favorable tax laws.
Swiss cantons, or states, which had met to debate a possible doubling of the tax rate, opted instead for a study comparing their systems for ultra-rich expatriates with those applied in other havens, including Luxembourg, Monaco and parts of Britain.
Last month, the French singer Johnny Hallyday, France's answer to Elvis Presley, set off a media and political storm when he announced he was moving to Gstaad, a Swiss ski resort, to reduce his tax bill.
Foreigners with no local income pay Swiss tax according to their spending on rent or mortgages. Finance ministers from the country's 26 regions met Friday in Bern to discuss revising the system, said Kurt Stalder, who led the conference. If approved, taxation on 3,600 residents could double.
Arnaud Montebourg, a Socialist lawmaker in France, last week called Switzerland a "paradise for the financial aristocracy," while the Swiss economics minister, Doris Leuthard, said the system was unfair to her country's millionaires.
Under current legislation, foreigners with no income in Switzerland need to pay at least 75,000 Swiss francs, or $60,142, in taxes on average, corresponding to an annual income of about 250,000 francs. More than doubling the levy to match incomes of up to 600,000 francs is "more realistic," Stalder said.
Unlike residents with a Swiss paycheck, wealthy foreigners need not declare their assets or income. They are taxed on an amount corresponding to their annual rent multiplied by five. Swiss passport holders can benefit from the same measure if they return after an absence of at least 10 years without working.
While nations including Luxembourg, Ireland and Monaco also offer tax breaks to lure rich immigrants, Switzerland's system allows cantons to impose individual levies on residents' income and assets as well as companies' profits.
"It's not a question of justice or injustice; there's no just tax," said Jean- Daniel Gerber, head of the Swiss State Secretariat for Economic Affairs.
Leuthard started a Swiss debate by saying the current system was discriminatory, with wealthy natives, including the tennis star Roger Federer, paying "10 times" more taxes than foreigners.
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