03/08/21

SWITZERLAND: Rich Europeans Return to Jurisdiction, Its Banks.

As published on finews.com, Monday 2 August, 2021.

Rich Europeans stopped putting their money into Switzerland when banking secrecy de facto disappeared, but now they are returning and not only for tax reasons.

The latest half-year from Swiss banks leave no doubt that super-rich foreigners are pouring their money back into Switzerland again. This is particularly reflected in new money inflows, which are important for banks.

German news agency «DPA» has omes to an interesting conclusion: It is no longer rich Arabs, Chinese or Indians who are the main players, but Germans, Italians and Britons – i.e. the exact same clientele that boosted Swiss banks’ earnings back in the era of banking secrecy.

The trigger for this latest development is undoubtedly the coronavirus pandemic, «DPA» said, citing a UBS study that said the pandemic had boosted the desire for a safe haven. In addition, the risk of higher taxes for top earners is manageable because of the Swiss government’s stable finances. There is a certain irony in wealthy Europeans are once again eying Switzerland for tax reasons.

The coronavirus pandemic sparked a surge in demand for luxury real estate in Switzerland, according to UBS.

Prices in the luxury segment rose 9 percent year on year in 2020, more than double the 4.4 percent overall in the Swiss residential real estate market. The number of transactions in the sector rose by over 50 percent to more than thrice the five-year average.

Many Germans left Switzerland for their homeland in the few years leading up to the start of the pandemic. However, that trend has now gone into reverse among the super-rich, the ultra-high-net-worth individuals as the banks call them. They are also banks’ most sought-after clientele.

Attractive fixed sum taxation deals in some cantons also contribute to Switzerland being increasingly recommended as the place to be for wealthy Europeans – at the expense of London, Monaco or Malta. In addition to the high quality of life, the reliable legal system, stable government and high-quality infrastructure, the banks' international expertise also play a decisive role in making Switzerland a desirable location.

Even if the banking secrecy of yore has gone the Swiss banking system still protects its customers’ finances, something which is not true everywhere.