You are watching places! Every Tuesday we bring you an insightful look into fascinating events from all around the world. Welcome to ALUX.com! The place where future billionaires come to get inspired. Hello, Aluxers, and welcome to another original video presented by Alux.com. Today we are exploring the wealth of another nation that is relatively small in size but powerful and influential on the world stage. Switzerland is almost half the size of Scotland and has a population of about 8.5 million. It’s known as one of the most luxurious countries in the world with a strong economy and a high number of millionaires and billionaires. But just how rich is Switzerland? Today we’re going to get to the bottom of that question, but first let’s learn a little bit more about this European nation. Switzerland’s official name is the Swiss Federation. It is widely recognized as the home to a large portion of the Alps, but most of its population lives on the Swiss Plateau with large concentrations in the cities of Zurich and Geneva. This landlocked country is renowned for its permeating alkaline lakes, green valleys, and gigantic mountains. Its burgeoning cities are the center of this region’s unique culture that blends both the old and new. There is much more to Switzerland than its natural beauty. The country is home to some of the biggest watchmaking companies such as Rolex, Audemars Piguet, and Notre Dame. Apart from watches, Switzerland is also renowned for its wide variety of luxury products. Interestingly, instant coffee originated in Switzerland after Nestle Henri started Nestle in 1867, which you can learn more about by watching our video of the 15 things you didn’t know about Nestlé by clicking in the upper right-hand corner. Today, the people of Zurich pay the highest average price for coffee in the world according to the world coffee index. Well, that hardly seems fair. Switzerland has also managed to maintain its position as the prime trading partner for the European Union for decades. A whopping 78% of imports headed for Switzerland come from the EU, while 42% of Swiss exports are sent to EU nations. It is a relationship that has gone a long way in defining the country’s economic success, but that’s not where it all began. Switzerland was not always a rich country. Things took a turn for the better after the economic boom of the late 19th century, after which it took the region about one century for its population to almost triple—from 3 to 8 million—which also contributed to its economic growth. However, there were several factors at play during this period of transformation. A devastating famine hit the country in 1816, which brought about increased unemployment. The farmers began looking for other work, which created a surplus of available labor. This ended up benefitting the industrial sector. With plenty of rivers to provide enough energy for industrial development, Switzerland was able to withstand competition from England as well as Germany. Another factor that led to Switzerland’s accumulation of wealth is the abolishment of intellectual property rights by the Swiss government in the mid to late 19th century. This allowed Swiss companies to copy any developments made by foreign or local competitors. Finally, a 1935 policy is responsible for shaping the Swiss banking sector into what it is. This legislation called for baking secrecy, which provides safe shelter for wealthy individuals. Additionally, income generated from foreign capital is only subject to a flat tax. This has made the country a hotbed for foreign financial inflow. But, let’s now go into more detail now about just how rich people benefit from Switzerland’s policies. With an estimated $2.5 trillion held in Switzerland, it’s clear that there is a huge number of wealthy people who prefer this region to other European states. This is primarily due to its low tax rates for foreign persons and corporations, which make it a tax haven for the wealthy. Such individuals have the option of paying taxes in a lump sum at very low rates. In simple terms, the Swiss government taxes foreigners based on how much they spend on their monthly rent. Foreigners are required to pay taxes worth 5 times their rent in order to fulfill their financial obligations. Rich couples also end up benefiting from this arrangement as taxes are based on households rather than on individuals. This form of taxation has seen the country attract a huge number of wealthy persons. This taxation system is also extended to foreign corporations as they are offered substantial tax breaks. However, this is limited to entities that hold at least 20% of other companies’ shares. The amount of tax owed on profit is calculated in terms of the total number of shares owned by the business entity. This explains why 30% of conglomerates in the Fortune 500 have established operations in this region. This country is also known for its ability to conceal its clients’ bank details. It has managed to maintain the number one position in the Financial Secrecy Index in spite of changes forced upon the Swiss banking system by pressure from the EU and the United States government. Considering all of this information, let’s now look at the question at hand. In 2018, Switzerland had a per capita GDP of $82,950, which was the second-highest in the world next to Luxembourg. Its total GDP in 2018 was $704 billion, which is ranked 20th among the world’s economies. There’s a popular misconception that all Swiss nationals are wealthy. Although not factual, this belief stems from the fact that Switzerland is home to 1.8% of the top 1% of the world’s richest individuals. This is in spite of its modest population which makes up only 0.1% of the global population. On average, each Swiss-based adult is worth an estimated $530,240 as of 2018. Australia comes in at a distant second with an average of $411,000 per adult, while the United States comes in at third with $403,970. In dollars, the overall household wealth in Switzerland has risen by 129% in just 2 decades. This is largely attributed to the steady appreciation of the local currency against the dollar. Individuals worth $100,000 or higher make up 60% of the country’s population, and 11% qualify as millionaires. An estimated 980 people have assets amounting to $100 million or higher and another 2,700 are categorized as Ultra High Net Worth persons with assets totaling at least $50 million. Based on these facts, it’s clear that there is an abundance of wealthy residents in Switzerland, thus qualifying it as one of the wealthiest nations in the world, but there’s also another side to the story. On the flipside, financial inequality is rampant in this country. The number of people worth $10,000 or less are more than the billionaires and millionaires combined. The richest 20% generate revenues five times higher than those generated by the poorest 20%. According to the country’s Statistical Office, up to 57.5% of the country’s population is classified as middle class. This goes to show that despite the abundance of wealth in the region, there is a significant financial gap between the rich and the poor. A lot more needs to be done to bridge this gap and further increase Switzerland’s pool of wealth. Yes, Switzerland is more than just a thing of natural beauty it is home to some of the wealthiest people in the world thanks to its highly competitive economy and tax haven status. It is ranked as the richest landlocked nation in the world, coming ahead of Austria, Kazakhstan, and the Czech Republic. Switzerland has one of the most advanced free-market economies in the world with a large sector represented by the Swiss banking industry and tourism. We can clearly conclude from all the facts presented today that Switzerland is a very wealthy nation, and it’s unlikely to lose its rich status anytime soon. To dive in deeper to the concept of tax havens and how they have shaped the world’s economy, check out the book Treasure Island: Tax Havens and the Men Who Stole the World. This book looks at the complicated role tax havens play in various societies and explores how they have contributed to the highest levels of income inequality in history. It’s exclusively available on Audible for $20, but save your money. Just go to alux.com/freebook and sign up so that you can get the audiobook version for free thanks to our partnership with Audible! Now Aluxers, since we’re wrapping up this topic, we’d like to know: Let us know in the comment section.
And, of course for sticking with us until the end you get a bonus. Here it is: Does the name Bertarelli ring a bell?
Maybe not, but the Swiss are very familiar. The Bertarelli siblings are the richest in Switzerland. Ernesto Bertarelli is the richest man in the country with an estimated worth of $8.6 billion while his sister, Dona Bertarelli, is the fourth richest lady in Switzerland with an estimated worth of $4.4 billion. Both have accrued their funds through investments in the biotech industry and are the brains behind the famous Serono brand. Thank you for spending some time with us Aluxers Make sure to subscribe so you never miss another video. We also handpicked these videos for you to watch next. As always, the conversation continues on social media. Thanks again and we can’t wait to have you back tomorrow.