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Patek Philippe threatens Geneva exit over taxes

Malcolm Curtis · 24 Mar 2014, 22:08

Published: 24 Mar 2014 22:08 GMT+01:00

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Thierry Stern, president of the company, said in an interview with Le Temps newspaper that the canton’s “stifling” tax policies were forcing him to consider relocating.

In particular, Stern pointed to Geneva’s wealth tax for making life difficult for family business owners.

The tax, one of the highest in Switzerland and 10 times higher than in the cantons of Zug or Schwyz, levies a percentage of the value of an individual’s assets.

This year Geneva expects to raise 636 million francs from the wealth tax, around 15 percent of the fiscal revenues it is forecast to receive from individuals.

But the tax hits families who own their businesses particularly hard, especially if the enterprises are successful.

Patek Philippe, established in the Swiss city in 1851 and renowned for making some of the most expensive and coveted timepieces in Switzerland, is apparently prospering.

Stern told Le Temps that the company sold around 55,000 watches last year, an increase of two to 2.5 percent from the previous year.

It is expanding its space by 30 percent at Baselworld, the world’s largest watch fair starting on Thursday, where it sells the bulk of its output to dealers.

While the company, owned by the Stern family since 1932, does not make public sales figures, analysts estimate its revenues last year at around 1.1 billion francs, Le Temps said.

Stern told the newspaper that while the past year has been “rather positive for us”, in a difficult and changing environment, Geneva’s wealth tax policies are “dangerous for our future”.

He noted that most companies of Patek Philippe’s size are owned by shareholders rather than entirely by one family.

“Either we will have to sell the company or we will be forced to move, perhaps to another canton,” Stern told Le Temps.

“Not that I want to leave Geneva, but at a given moment it is imperative to become realistic in order to preserve the brand.”

In the past, Stern has repeatedly said he had no intention of selling the company because he wanted to retain its independence.

He said he hoped authorities would reconsider the impact of the tax policies on his company, which employs 1,600 people at its plant in Plan-Les-Ouates and an additional 600 people outside of Geneva.

Story continues below…

Concerns about companies leaving Geneva are acute in the wake of the vote by Swiss citizens last month to impose quotas on immigrants from the European Union.

Similar worries are shared in the canton of Vaud, where 100 employees at ATI Stellram, a metal fabrication and tool plant in the town of Gland, learned on Monday that it is closing.

The plant is owned by US company Kennametal, which acquired the plant just last year through a takeover.

It is scheduled to shut its doors in August, according to a report from 20 Minutes newspaper.

Malcolm Curtis (news@thelocal.ch)

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