Swiss voters reject 50% inheritance tax for the super-rich

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Swiss voters on Sunday overwhelmingly rejected a proposal to impose a 50 per cent inheritance levy on the super-rich, in a contentious referendum that came as governments around the world wrestle with how to tax the wealthy.

More than 80 per cent rejected the initiative, with about 42 per cent of the population participating by Sunday afternoon. Opponents of the measure had feared that a narrow defeat would invite other similar tax proposals in years to come.

The referendum, one of the most divisive in recent Swiss political memory, comes amid a global split between countries competing to lure wealthy families with fiscal incentives and those seeking to tax what they see as excessive fortunes.

The proposal from the far-left Young Socialists party would have introduced a federal inheritance and gift tax of 50 per cent on estates and transfers above SFr50mn (£47mn), marking a dramatic break from Switzerland’s tradition of decentralised, low-burden taxation. Revenue would have been earmarked for climate-related spending. 

The federal government opposed the initiative, warning it would damage Switzerland’s appeal as a stable home for internationally mobile wealth. The proposal was originally drafted to be retroactive — a clause that provoked a fierce backlash from business groups and tax lawyers and was later softened.

The move prompted deep anxiety among Swiss family offices and wealthy residents, some of whom were reviewing relocation options this year ahead of the vote, the Financial Times reported in June. Economists and lawyers warned the measure could affect succession planning for family-owned companies whose wealth is tied up in illiquid assets.

Frédéric Rochat, managing partner at Swiss private bank Lombard Odier, said the unequivocal result showed “Swiss common sense had prevailed”.

“Swiss people like to see their country’s policies remain stable [and] predictable,” he said. “They reject base populism that makes unnecessary noise.”

A “Yes” vote would have been a “significant change” to the Swiss tax landscape, said Philipp Zünd, tax expert at KPMG in Switzerland.

“Swiss voters have reinforced Switzerland’s reputation as a stable business hub,” he said.

The Swiss vote lands at a moment when governments’ approaches to wealthy individuals have diverged sharply.

In some financial centres the race to attract rich families is accelerating. Dubai, Abu Dhabi, Hong Kong and Singapore are offering tax concessions and light-touch regulation to draw single-family offices — the private investment vehicles of the global super-rich. Hong Kong, which hosted an estimated 2,700 family offices in 2023, aims to attract 200 more by the end of 2025.

Elsewhere, countries are tightening rules or increasing levies. Italy has drawn a surge of arrivals under its flat-tax regime for foreign income, centred on Milan, but the government announced in October it plans to increase the levy by a further 50 per cent to €300,000 from next year.

In her first Budget last year, UK chancellor Rachel Reeves hit the super-rich by confirming the abolition of “non-dom” status, which allowed UK residents who declared their permanent home as being overseas to avoid paying UK tax on foreign income and gains.

Swiss lawyers said the referendum proposal had undermined Switzerland’s chances of attracting tax exiles from the UK following the non-dom change, with many opting for Italy rather than Switzerland.

Meanwhile, in late October the French parliament voted to reject a Socialist proposal for a tax of 2 per cent on wealth of more than €100mn. Another proposal for a 3 per cent tax on wealth over €10mn was also rejected.