Fearing huge tax hikes under a possible centre-left coalition, many Germans have made their money in Switzerland. Switzerland is still the country with the largest foreign wealth. But tax evasion is no longer so easy.

German millionaires are shifting their fortunes to Switzerland for fear of a government coalition following Sunday’s federal elections. “It’s a hot topic for the ultra-rich,” says a tax lawyer based in Germany with extensive activities in Switzerland. Reuters.

“Entrepreneurial families are extremely concerned.”

A possible government coalition made up of the SPD, the Greens and the Left could lead to a re-introduction of the estate tax and an increase in the inheritance tax. Wealth tax has not been levied since 1997. The law has not yet been abolished.

The number of German depositors in Switzerland to increase in 2021

Switzerland is the country with the largest foreign assets. In 2020, cash flow increased. Big banks like UBS, Credit Suisse and Julius Baer benefit from this.

According to data from the Bank for International Settlements, deposits in banks in Switzerland by German households and companies rose by about $5 billion to $37.5 billion in the first quarter of 2021.

More recent figures are not yet available. A client advisor at a large Swiss bank, which deals mainly with Germans, told Reuters it has posted higher-than-average numbers of new money inflows over the past three months.

And Florian Durslein, European Head of Asset Manager LGT Switzerland, said:

“Many wealthy people, especially entrepreneurs, fear that there will be a shift to the left in Germany – no matter how the election ends.”

No protection against tax evasion

Simply opening an account with a Swiss bank does not help. Due to international pressure, the account details of the customers are now being given to the concerned tax authorities. A spokesman for the State Secretariat for International Financial Affairs said:

“The Swiss financial center is characterized by stability, legal protection and a high degree of financial capability. However, it does not provide any protection against tax evasion.”

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