By Oliver Hirt

ZURICH (Reuters) – A potential lurch to the left in Germany’s election on Sunday is scaring millionaires into moving assets into Switzerland, bankers and tax lawyers say.

The reintroduction and tightening inheritance taxes could be part of the agenda if the Social Democrats (SPD), the hard-left Linke, and the Social Democrats are elected to power.

According to a German tax attorney with extensive Swiss operations, “This is red hot for the super-rich.” “Entrepreneurial family are very alarmed.”

This shows how rich people continue to see Switzerland as a place where they can park their wealth. This is in spite of its attempts to get rid of its status as a “safe haven” for billionaires.

No country has more offshore assets than Switzerland and inflows accelerated in 2020, to the benefit of big banks such as UBS, Credit Suisse (SIX:) and Julius Baer. The attractiveness of Switzerland’s stability was due to geopolitical tensions, fears about the COVID-19 economic pandemic and other concerns.

Bank for International Settlements data shows that deposits by German households and businesses at Swiss banks grew to almost $5 billion, or $37.5 billion, in the first quarter 2021. This does not include financial products, shares, bonds, and other securities. Although more recent data is not available, insiders claim that the inflows continue. A veteran advisor at large Swiss banks who mostly deals with Germans said that he had booked more than average amounts of money in recent months.

“Many wealthy people, especially entrepreneurs, fear that there will be a lurch to the left in Germany – no matter how the elections turn out,” says Florian Dürselen, head of Europe at wealth manager LGT Switzerland.

A top Swiss banker stated that he knew of a few German entrepreneurs who wanted to establish a presence outside Germany in the event things turn too leftist (leftist).

TAX ON ASSETS

A poll on Thursday showed the SPD, on 25%, leading outgoing Chancellor Angela Merkel’s conservatives by four points. While the SPD would like to increase inheritance and wealth taxes, the Greens (a potential partner in a coalition) plan to tax more fortunes. The tax lawyer stated that both parties envision increasing income tax for high-income earners. However, taxing assets will raise more money.

According to him, clients were requesting more advice, as some entrepreneurs sought protection by making investments in Switzerland through companies or transferring their assets to Liechtenstein foundations.

Transferring cash to a Swiss account is not enough. Due to international pressure, Swiss banks now provide account details to tax authorities in client countries.

The Swiss are a strong financial center because of their stability and legal security. They also have a high level financial expertise. It does not provide any protection against tax fraud,” stated a spokesperson for State Secretariat for International Financial Matters.

LGT’s Dürselen said he recently spoke with a German entrepreneur who feared Germany could soon tax foreign assets or transactions harshly, which fostered the view of Switzerland as a safe haven for capital.

According to him, “Personally I believe that substantial assets will continue being moved to Switzerland.” According to a local politician, many German-educated entrepreneurs are interested in living in one of the suburbs near Lake Zurich.