Billionaires from Dubai to Switzerland: Lugano in the spotlight

Context

TL;DR

• Dubai billionaires moving to Switzerland for stability.
• Lugano sees 15% increase in info requests from Dubai.
• Ticino offers flat 20% tax on income up to 4M CHF.
• 50M USD transfer to Switzerland saves 1.7M USD in taxes.

Key facts

• Cosa: Dubai billionaires moving to Switzerland.
• Quando: Between 20 and 30 billion dollars expected in coming months.
• Dove: Lugano, Ticino, Switzerland.
• Chi: Patrick Akiki, head of financial services at PwC.
• Importo: 50 million dollars transfer to Switzerland.
• Scadenza: Favorable tax regime valid for 10 years, renewable for 5 more.
• Aumento: 15% increase in requests for information from Dubai citizens to Lugano in 2023.
• Regime fiscale: Flat tax of 20% on declared income, up to a maximum of 4 million Swiss francs per year.

The Attraction of Switzerland

Geopolitical uncertainty is pushing Dubai billionaires to consider Switzerland as a safe destination. The war between the United States and Iran has created a climate of instability that is also affecting the Emirate, traditionally seen as a safe financial center. According to industry sources, it is estimated that between 20 and 30 billion dollars could be transferred in the coming months.

Patrick Akiki, head of financial services at the consulting firm PwC, confirmed to the Telegiornale that 'we are talking about several tens of billions that are already arriving or will soon be transferred.' This trend does not surprise Christoph Schaltegger, director of the Swiss Institute for Economic Policy, who states that 'capital is generally very mobile' and that these wealthy people with strong international ties can move quickly.

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Operational details

Implications for cross-border workers

The arrival of new wealthy investors from Dubai could have several implications for cross-border workers in Ticino. Firstly, it could increase the demand for financial and real estate services, with possible repercussions on house prices and rents.

Comparison with the previous situation

Before this wave of relocations, the real estate market in Ticino was already growing, with an increase of 5.3% in 2022 compared to the previous year. The arrival of new investors could further accelerate this trend. For example, in Lugano, the average price per square meter for an apartment has gone from 7,500 CHF in 2020 to 8,200 CHF in 2023. This could make it more difficult for cross-border workers to find affordable housing, especially in central areas like Lugano, Bellinzona, and Locarno.

Possible scenarios

If the billionaires from Dubai decide to move to Switzerland permanently, they could bring new job and investment opportunities. However, it is also possible that their presence will increase competition for local services and resources.

📊 Operational checklist for cross-border workers:

• Check work contracts: Ensure that the contract complies with Swiss regulations and includes clauses for adjustment in case of increased cost of living.
• Financial planning: Consider the impact of possible rent increases and living costs.
• Search for alternative accommodations: Explore options in less central municipalities like Mendrisio or Chiasso, where prices might be more affordable.

Impact on the financial market

The arrival of new capital could also have an impact on the Swiss financial market. With more international investors, the Swiss financial hub could become even more attractive, with possible benefits for local financial services.

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Key points

What to do if you're a cross-border worker

If you're a cross-border worker in Ticino, it's crucial to be aware of the dynamics of the real estate and financial markets, especially with the arrival of new international investors. Here's a practical guide to help you navigate this situation effectively.

Monitor the real estate market

Prices of homes in Ticino increased by 5.3% in 2023, with cities like Lugano and Mendrisio seeing significant rises. For example, the average price of an apartment in Lugano went from CHF 8,500 to CHF 9,000 per square meter. Keep an eye on these trends and consider buying if prices continue to rise.

Diversify your investments

Consider investing in index funds or ETFs, which offer immediate diversification. For example, a fund like the SPDR S&P 500 ETF Trust (SPY) can help you spread risk across a wide range of companies.

Stay informed about regulations

As of January 1, 2024, Switzerland has introduced new rules for cross-border workers, including an increase in the annual income limit from CHF 129,000 to CHF 140,000 to obtain a residence permit. Make sure you know these changes to plan your future effectively.

Use useful tools

Use the salary calculator to compare your earnings and plan your budget. For example, if you earn CHF 100,000 gross per year, the calculator can help you estimate taxes and net income.

Operational checklist

• Monitor property prices in the municipalities of your interest.
• Diversify your portfolio with investments in index funds.
• Update yourself on Swiss regulations related to cross-border workers.
• Use online tools to plan your budget.

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