Switzerland tries to seduce UK Financiers

Honey Bear · Jan 29, 2010

Senior financiers are using top-level meetings in Davos to warn that the hostile tax regime in Britain will persuade many bankers to move to Switzerland.

The group is expected to use a meeting with Alistair Darling today to complain about the “victimisation” of the banking industry and to say that the looming rise in top rate income tax, the 50 per cent bonus tax and the rule that 60 per cent of bonuses must be deferred for anyone earning more than £1 million make the UK far less attractive than other countries.

Two senior bankers attending the World Economic Forum said yesterday that a substantial number of employees had asked to leave London. “Banks like us are going to have to think hard about whether we respond to staff requests,” one boss said.

Some employees, particularly Americans who have been working in their London offices, are asking to go home. Others are apparently being seduced by the low taxes and high standard of living in Switzerland.

Several Swiss cantons have been marketing themselves in London, with Zug — the tiny canton where individuals can pay about 10 per cent in income tax — one of the most active.

A business group representing eight cantons, the Greater Zurich Area, has already marketed the region in London, and individual cantons have similar plans.

Marc Rudolf, a business development manager for the Greater Zurich Area, spoke at an event for hedge fund managers in London in September and said that “many more events” were planned for this month and next. Law and accountancy firms are planning such events for hedge funds and other wealthy clients, Mr Rudolf said.

While big banks consider requests from staff for moves, more nimble hedge fund managers are already packing their suitcases. Kinetic, a leading hedge fund consultancy, estimates that as many as 150 hedge fund managers will leave the UK and relocate to Geneva, Zurich or another Swiss canton before the new tax year.

The Chancellor’s 50 per cent tax rate on incomes above £150,000 comes into effect on April 6. This, and other tax measures regarded by hedge funds as anti-entrepreneurial, has led them to seek more tax-efficient locations, they say.

Kinetic has advised 23 hedge funds in the past 18 months on their plans to relocate from London to Switzerland. Andrew Shrimpton, a partner at Kinetic, said his consultancy was working with hedge funds that have recently moved staff to Switzerland to ensure that their managers comply with regulations put in place by the Financial Services Authority.

Staff based outside the UK are not obliged to conform to FSA guidelines, “but investors are often comforted if they do,” he said. Kinetic has been carrying out FSA “health checks” for a dozen Swiss-based hedge funds, ten of which have moved there from Britain.

BlueCrest, a London hedge fund manager, has already decided to relocate 50 of its 340 staff to Geneva. The company, whose offices at present overlook Buckingham Palace Gardens, is planning the move before April.

Others could follow, including Brevan Howard Asset Management, Europe’s biggest hedge fund, which has invited London staff to consider whether they want to move to Geneva. It has set up an office that could accommodate up to 50 people.

The Times has learnt that the team could include some of Brevan Howard’s highest earners, who are looking at houses and schools in French-speaking Swiss cantons.

“A final decision is likely to be taken by April,” a manager in Geneva said. “They’ll make the move if they can persuade enough of their people to come here and, ultimately, that depends on the wives and children.”

There are drawbacks to moving to Switzerland. Critics point to high house prices, a lack of local business talent and “not much to do”.

In a survey carried out by Financial News, one manager complained about Switzerland’s strict bureaucracy: “Using the wrong colour bag for rubbish results in a SwFr150 (£88) fine — and they track you down,” he told the newspaper.

Another said that soaring property prices and a lack of supply, particularly in Geneva, meant that it was difficult to find accommodation for support staff, many of whom have to commute to work from outside the city.

The leaders of big banks also have a more complex decision to make than hedge funds, as they are engaged in a wider struggle with the Government.

One banker who admitted he had received requests from some of his well-paid staff to move was unwilling to talk about the issue because he did not want to further inflame relations with the Government at a time when politicians around the world are highly critical of bankers’ pay and their activities.
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Full Article [Times Online]

Haven't these guys heard of obtaining a second passport...

Unfortunately that still won't help with the 50% bonus tax. Not looking good for foreigners wishing to work in London. Or even Brits wishing to work in London... although European countries give great incentives for their nationals to work abroad.

SamFisher · Jan 29, 2010

^ I've read a lot of articles recently that basically debunked the "oh yeah? We'll move to switzerland!" routine by londoners.

The fact is that Switzerland is no paradise either. Taxes are pretty high, and even worse, the cost of living is more expensive. The vacancy rates for apartments and houses are a fraction of those even in an expensive market like London - one article I read estimated 200 3 bedroom apartments available in all of Zurich. Apparently available office space is also hard to find, and according to most, the projected influx has yet to materialize.

Bloomberg ran a pretty good article about this yesterday - rather than an exodus, most people are going to set in London - the tradeoffs don't really work out.

Edit: here is the article:
Davos Is Closest Most London Bankers Will Get to Swiss Move
http://www.bloomberg.com/apps/news?pid=20601087&sid=a73WrKRzrdJI&pos=7

Honey Bear · Jan 29, 2010

SamFisher said:

^ I've read a lot of articles recently that basically debunked the "oh yeah? We'll move to switzerland!" routine by londoners.

The fact is that Switzerland is no paradise either. Taxes are pretty high, and even worse, the cost of living is more expensive. The vacancy rates for apartments and houses are a fraction of those even in an expensive market like London - one article I read estimated 200 3 bedroom apartments available in all of Zurich. Apparently available office space is also hard to find, and according to most, the projected influx has yet to materialize.

Bloomberg ran a pretty good article about this yesterday - rather than an exodus, most people are going to set in London - the tradeoffs don't really work out.
Click to expand...

Taxes are lower in Switzerland.

What the shrewd Brits have been doing in the past is legally obtaining another nationality (through $$$) and living as foreigners in England to get past the income tax and in some cases evade it altogether. I've heard of other details that were a bit more dodgy. Nowadays financial transparency has never been higher throughout Europe, with the British govt keeping watch over it's citizens who deposit funds in Swiss banks etc. But when the govt starts taxing your employer 50% of your bonus (in an industry like finance)... that's really discouraging. Keep in mind Switzerland isn't the only option out there.

ghettocheeze · Jan 29, 2010

Terrible thread title! I thought by "seduce" you meant this...

pippendagimp · Jan 29, 2010

SamFisher said:

^ I've read a lot of articles recently that basically debunked the "oh yeah? We'll move to switzerland!" routine by londoners.

The fact is that Switzerland is no paradise either. Taxes are pretty high, and even worse, the cost of living is more expensive. The vacancy rates for apartments and houses are a fraction of those even in an expensive market like London - one article I read estimated 200 3 bedroom apartments available in all of Zurich. Apparently available office space is also hard to find, and according to most, the projected influx has yet to materialize.

Bloomberg ran a pretty good article about this yesterday - rather than an exodus, most people are going to set in London - the tradeoffs don't really work out.

Edit: here is the article:
Davos Is Closest Most London Bankers Will Get to Swiss Move
http://www.bloomberg.com/apps/news?pid=20601087&sid=a73WrKRzrdJI&pos=7
Click to expand...

taxes are lower in CH and regarding the residential situation, i don't believe zurich is more expensive than london......in fact for the same high standard of flat or house you get in zurich, the equivalent quality and size in london will be noticeably more expensive.......finding a place in switzerland as a renter is indeed difficult though, because there is an overly thorough and cumbersome vetting process for prospective tenants plus swiss nationals typically get first dibs on anything available......in any case, don't nobody want to park their dough in CH anymore after they named names in recent years, so their private banking bizness is kaput now......those londoners will probably move out to the far east...

MoonDogg · Jan 29, 2010

ghettocheeze said:

Terrible thread title! I thought by "seduce" you meant this...

Click to expand...

No, it's like this.....

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Switzerland tries to seduce UK Financiers

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