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Canton votes to up taxes for 5 foreign millionaires

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17:26 CEST+02:00

Substantial tax breaks for super-wealthy foreigners living in the canton of Schaffhausen in northern Switzerland were revoked in a popular vote on Sunday.

Just over 55 percent of the electorate voted in favour of the cantonal initiative calling for an end to tax privileges for foreign millionaires, which was launched by the left-wing Social Democrats (SP) and Alternative List (AL) as well as unions.

However, the impact of the vote will be minimal since it affects only five millionaires living in the canton who will have to pay more taxes in future, Swiss national broadcaster SF reported.

Schaffhausen local administration tried to fight the initiative with a counter-proposal arguing that getting rid of its flat-rate or lump-sum tax could lead to tax deficits through those hit failing to pay or deciding to leave Switzerland.

Loaded foreigners previously paid lump-sum taxes based on the price of their property but will now have to pay taxes based on their net worth, according to SF. 

Some wealthy Swiss nationals have complained about the special arrangement, which they view as unfair since they pay the full whack on their own income.

Schaffhausen is the second Swiss canton, after Zurich in 2009, to annul tax breaks for wealthy foreigners. Other cantons are considering following suit.

The AL launched another initiative in April calling for a national ban on such tax breaks. However, a similar federal initiative in 2007 was rejected by the Swiss parliament.

Switzerland, especially the French-speaking region, has a reputation for attracting and benefiting from wealthy foreigners through tax breaks, with IKEA owner Ingvar Kamprad and Formula One champion Michael Schumacher living on the shores of Lake Geneva.

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