Finance Minister Eveline Widmer-Schlumpf has defended a controversial inheritance tax accord with France while the Swiss expatriate community has expressed concerns that the deal could set a precedent for other countries
Addressing the Congress of the Organisation of the Swiss Abroad (OSA) in the mountain resort of Davos on Saturday, Widmer-Schlumpf admitted that the deal signed last month is not ideal.
But she rejected allegations that Switzerland had failed to achieve a better result in negotiations.
“It is better to have an accord on inheritance tax, than to have no deal at all,” she told several hundred delegates to the meeting.
She added Switzerland was able to gain a number of assurances from France, which is home to about 180,000 Swiss citizens – its largest expat community.
Widmer-Schlumpf mentioned separate concessions for corporate taxes and Swiss citizens who are taxed only eight years after they settle in France.
Switzerland vs globalisation
The two-day congress in Davos focuses on Switzerland’s position in an increasingly globalised world.
Speeches, notably by Franz von Däniken, a former state secretary in the foreign ministry, warned of complacency if Switzerland wants to remain at the forefront.
He said education and research should be made a priority ahead of the manufacturing industry and the financial sector.
Participants in workshops discussed different aspects of globalisation, notably for the economy, for migration but also active Swiss involvement in international organisations.
She said the deal, still to be discussed in parliament, would provide legal security and allowed the government to re-open negotiations on lump sum taxation with its western neighbour, as well as on the airport of Basel-Mulhouse, run jointly by Switzerland and France.
The finance ministry involved the country’s 26 cantons, which traditionally enjoy wide-ranging tax autonomy, as well the expatriate community in the negotiations over a new inheritance tax, Widmer-Schlumpf said.
France unilaterally cancelled the 1953 accord with Switzerland in an effort to crack down on wealthy French citizens trying to avoid being subjected to comparatively high taxes.
Under the new accord, in cases where the deceased used to live in Switzerland, beneficiaries of any inheritance would henceforth be taxed in France.
Paris said it would implement the rules without granting any concessions, if the Swiss parliament were to throw out new accord. The move is in line with international standards of the Organisation for Economic Co-operation and Development (OECD), according to Widmer-Schlumpf.
On Friday, the French ambassador to Switzerland, Michel Duclos, pointed out Switzerland is the only country, besides Germany, which was able to reach an accord with France.
He also hinted that Switzerland might have underestimated the importance of the issue.
In her keynote speech to the annual congress, Widmer-Schlumpf outlined the benefits and risks of globalisation for Switzerland’s banks which manage about $2.1 trillion (CHF 1.9 trillion) of foreign assets, about a third of the global market share. The finance industry makes up about ten per cent of Switzerland gross domestic product.
She said Switzerland had become more vulnerable to crises in other countries and was keen to actively cooperate in setting international standards. “The finance industry must base its strategy on three tenets: Quality, stability and integrity,” she said.
Comparing international negotiations with the popular Swiss Jass card game, Widmer-Schlumpf added Switzerland has a good hand but must choose the right moment to play a trump card.
“The Swiss Abroad are an important trump,” she concluded.