Swiss tax threat to the celebrity exiles

THE Swiss taxman may be homing in on the £500m fortune of Formula One megastar Michael Schumacher - and those of other celebrities living in the country - if opposition politicians in his adopted homeland get their way.

Officially listed as 'unemployed' in Switzerland, Schumacher, who is building a Bill Gates-style home beside Lake Geneva, moved from Germany in 1996 to escape tax of 42% on income and 53% on investments.

On top of that, the country imposes a 5% 'solidarity tax' toward the rebuilding of the former East Germany.

Schumacher, 36, left Germany when his accountants found they could cut him a sweet deal in the land of discretion and the numbered account. His status allows him to negotiate his tax with Swiss authorities, and the rate is understood to be less than 10%. On one estimate, he pays just e3m tax on his e70m (£47m) annual earnings.

But now politicians have launched the Schumi Initiative, under which they want the Swiss parliament to set higher rates of income tax for Schumacher and 3000 other wealthy expats living in the country.

They include Jackie Stewart, Phil Collins and Boris Becker, who moved there after being fined almost £3m and given a suspended jail sentence for tax offences in Germany.

When Becker moved after his conviction two years ago, he said: 'Friends have spoken in such glowing terms about the advantages this country has to offer. Obviously, I remain loyal to Germany, but over the past three years I have begun to move my business activities to Switzerland and it's only logical that I now also live where I mainly work.'

David Bowie is another resident, having moved to Lausanne in 1982. So are Celine Dion, David Coulthard and Sir Roger Moore, who splits his time between Switzerland and London. Each Swiss canton is allowed to set its own tax rates. That in Zug, where Becker lives, is the lowest. Schumacher lives in Waadt, where rates are higher.

Social Democrat Suzanne Oberholzer, who is behind the petition to parliament, says: 'We expect a decision in the autumn. It cannot be right for Michael Schumacher and some 3000 other foreign, rich inhabitants of Switzerland to be free from normal income tax rules.

'It is unfair to the Swiss people and to the people of neighbouring lands who must shoulder their fair share of their financial obligations. The ability to negotiate these customised deals should go. He should pay his fair share like everyone else.'

The Bill going before parliament states: 'The tax situation clearly contradicts the basic law of Switzerland.'

The case of Campione, on the shores of Lake Lugano, shows up the quirks in a Europe swiftly being homogenised by the EU and computer snooping. It is a little piece of Italian soil, completely surrounded by Switzerland.

There are no border controls so there is complete freedom to pass in and out. Located in the canton of Ticino, it has just 2000 inhabitants - and no income tax.

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Campione belongs economically to Switzerland, and uses Swiss banks and governmental facilities such as post office, telephone services and traffic laws. Cars registered in Campione bear Swiss licence plates.

Although part of Italy and subject to Italian law, Campione has special tax requirements because of its reliance on Switzerland. But there is no personal income tax and no municipal tax because all of Campione's income is raised from the operation of a municipal casino.

Not only the super-rich use Switzerland. Between £50bn and £80bn in undeclared wealth is estimated to have been stashed away in the country by hard-pressed Germans reluctant to turn it over to their tax authority. Police search cars crossing between Switzerland and Germany, looking for suspect money.

Former Miami Vice star Don Johnson was stopped in a car with two financial advisers three years ago, and details of share deals worth £8bn were found.

As the EU drive to unlock the secrets of Swiss bank accounts goes into overdrive, the country's Green Party is backing the move to collect millions in tax from the super-rich. 'I find it utterly scandalous that people like Michael Schumacher pay a fraction of what they should,' says party faction chief Cecile Buhlmann. 'It shames the little people of this country.'

The current maximum federal tax rate in Switzerland is 11.5% with individual cantons imposing their own tax rate on top. If the law is successful, Schumacher could end up paying more than 40% tax in total - almost as much as if he moved back to Germany.

Oberholzer is not certain her initiative will be a success. She knows much of her country's wealth and allure comes from keeping rich foreigners happy - and rich. But she says: 'At the very least, we will create the kind of pressure required to bring about a debate. We need to bring this situation into the open.'