"Expenditure-based taxation significantly lowers effective average tax rates for super-rich foreigners in #Switzerland. When certain Swiss cantons abolish this regime, the number of super-rich residents declines by about 43%." 💬 @eneabaselgia.bsky.social

#TaxingBillionaires

www.cesifo.org/en/publicati...

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👇Check out the full paper:
The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty | Publications | CESifo

9/ Potential policy implication: If Switzerland were to apply domestic third-party reporting (like most other countries do), compliance would likely rise even further.

8/ Today, Switzerland remains a haven for domestic tax matters, as domestic banking secrecy is still in place. My analysis shows the power of information sharing in Switzerland and hence highlights its still untapped potential.

7/ The takeaway? International cooperation in tax matters can increase transparency, and international third-party reporting can boost compliance even in a tax haven like Switzerland.

6/ So, did the AEoI really change long-term tax compliance behavior? YES. Amnesty participants didn’t just disclose wealth once. Even four years later, their reported wealth remains 50% higher than before, and they pay 25% more in wealth taxes. 📈

5/ What is driving these compliance effects? My analysis suggests it wasn’t stronger tax enforcement per se. Rather, the AEoI created a credible threat of detection. And it worked. 🚔

4/ Using detailed micro tax data and difference-in-differences designs, I document significant positive compliance effects. Overall, the AEoI prompted about 107k taxpayers (2% of all) to participate in the amnesty, disclosing CHF 42.3 billion—over 6% of GDP.

3/ Who were the evaders who participated in the amnesty? The richest 1% accounted for ~45% of all undisclosed assets. But it wasn’t just the rich who came clean. Unlike in other countries, Switzerland’s “middle-class” (P50-P90) also disclosed hidden assets—about 25% of the total.

2/ Using new Swiss tax data, I uncover that nearly 3% of all Swiss taxpayers—155,658 individuals—came forward under an amnesty between 2010-2020, revealing at least 66.4 billion CHF in previously hidden assets. That’s 10% of GDP! 🚨

1/ For decades, it was fairly easy to hide wealth offshore. Then came the AEoI: since 2017, over 100 countries automatically share banking information with each other. The result? A significant increase in tax compliance—even inside Switzerland.