Swiss referendum on 50% inheritance tax triggers fears of wealthy exodus

Swiss referendum on 50% inheritance tax triggers fears of wealthy exodus

Switzerland is bracing for a potentially transformative referendum in November that could impose a federal inheritance and gift tax of 50 per cent on wealth transfers above Swiss Francs 50 million ($61mn). Unlike current cantonal taxes, the proposed levy would apply across the country and include no exemptions for spouses or direct heirs, sparking concern among financial advisors and the country’s ultra-wealthy, the Financial Times reported.

Proposal sparks uncertainty and relocation

The tax proposal, initiated by the far-left Young Socialists party in 2022, has triggered waves of concern in Switzerland’s financial and legal circles. Under Swiss law, any proposal backed by at least 100,000 signatures must go to a nationwide vote — a mechanism that now risks shaking investor confidence and deterring high-net-worth individuals.

Lawyers and bankers say the looming vote is already prompting some of the country’s wealthiest families to consider relocating. “Swiss-based families have decided not to take any risk and to relocate ahead of the vote,” said Frédéric Rochat, managing partner at Geneva-based Lombard Odier. One Zurich-based private banker noted that a top client had already moved to Liechtenstein, fearing future political volatility even if the referendum fails.

Comparisons with UK and other jurisdictions

The timing of the Swiss vote is particularly sensitive, as it comes on the heels of changes in the UK that extended inheritance tax to the global assets of non-domiciled residents — a decision that prompted an exodus of wealthy individuals and is now under review. Other countries, including Italy, Greece and the UAE, are actively courting such individuals with more favourable tax regimes.

If approved, Switzerland’s tax would be more punitive than Italy’s 4-8 per cent inheritance tax rates, and far less competitive than jurisdictions like Dubai or Hong Kong, which have no inheritance or gift taxes.

Industry backlash and political opposition

Peter Spuhler, billionaire owner of Stadler Rail, called the proposal “a disaster for Switzerland”, warning his heirs could face a tax bill as high as SFr2bn. Business lobby group Economiesuisse has echoed these concerns, stating that the measure “endangers Switzerland’s position as a reliable and stable business location internationally”.

Even though the proposal has been rejected by both chambers of the Swiss parliament and the federal executive council, the fact that it is heading to a referendum has cast a long shadow over the country’s reputation for stability. Stefan Piller of BDO Zurich warned that several family-run businesses could face existential challenges if the proposal is enacted.
A test of Switzerland’s tax philosophy

Experts believe the referendum is unlikely to succeed, given Swiss voters’ traditional resistance to wealth taxes. The vote would require a double majority — both from the national popular vote and from the country’s 26 cantons. However, some argue that even a narrow defeat could lead to future proposals, prolonging a cycle of uncertainty.

“If it’s voted down with a very small majority, then we could easily be in the same situation again in a few years,” said Rochat. “It needs to be voted down with such an overwhelming majority that this possibility can be put to bed for 20 years.”

For now, the possibility of a 50 per cent federal inheritance tax is unsettling the country’s financial elite — and threatening Switzerland’s decades-old status as a global safe haven for wealth.