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September 11, 2009 11:33 pm
High-earning financiers who are unhappy with Gordon Brown’s plans for a 50 per cent top rate of income tax are being targeted by Swiss cantons hoping to persuade them to decamp to the alpine air and light tax regime.
The cantons’ marketing drive is aimed primarily at Mayfair’s hedge fund industry, which has seen a trickle of relocations from London to Switzerland.
Speaking at a breakfast meeting this week on “Moving to Switzerland” in Park Lane’s Metropolitan Hotel, Peter Müllhaupt, an official from Zug, the smallest canton, pitched the attractions of paying the “lowest tax rates in Switzerland ... [in] a picturesque small city by the lake with mountains in the background”.
Zug hopes to mine a rich seam of dissatisfaction. Jonathan Ivinson of Hogan & Hartson, a law firm which helped organise the seminar, said the mood of his clients had changed abruptly after April’s Budget, which outlined the plans for next year’s income tax rise.
“It was a combination of the rate and a perception that it was not the end of the matter,” said Mr Ivinson of the tax rise.
Sergio Martinez of the Swiss offices of Aylesford, a property agency, said: “From August, we have had a few enquiries every week from hedge fund managers.”
David Butler of Kinetic Partners, an advisory firm that acted for 23 hedge funds that had moved out of the UK, expected 20 per cent of the London market to leave over the next two years: “A significant minority don’t have strong natural ties to London,” said Mr Butler.
Hedge fund managers desire to be “members of a club” had added to Switzerland’s popularity, he said. “If you move to Geneva, there are 75 hedge fund managers there already.”
But Stuart Fraser, policy chairman of the City of London Corporation, said that many of those who had considered leaving the UK have decided to stay. “London is still a great place to make money,” he said.
Zug is home to about 10 hedge funds, with more going to the rival cantons of Schwyz, Zurich and Geneva. But its long-running success at attracting multinational headquarters was underscored in the spring when Informa, the British publisher, announced a move from London. Some cantons charge high income tax rates, but financial planning can reduce the rates of tax paid to less than 10 per cent.
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