Swiss cantonal tax officials met last Friday to reconsider the favourable fiscal arrangements granted to ultra high net worth foreign reside...

Swiss cantonal tax officials met last Friday to reconsider the favourable fiscal arrangements granted to ultra high net worth foreign residents. Instead of agreeing to the proposal to double of the present tax rate, they decided to opt for a six-month study comparing their arrangements with super-rich foreigners with those applied by other tax heavens like Luxembourg and Monaco. The meeting followed recent outcries in both France and Switzerland after the French rock star Johnny Hallyday declared that he intended to set up home in the Swiss resort of Gstaad to escape heavier French taxes. His decision moved the tax debate to the top of the French presidential election agenda. Swiss President Micheline Calmy-Rey has dismissed a French demand for the European Union to crack down on Swiss tax breaks for foreign individuals. Speaking on Swiss television on Friday night, Mrs Calmy-Rey called for more "respect" following comments from a key ally of French presidential candidate Ségolène Royal. Earlier French socialist politician, and spokesman for Mrs Royal, Arnaud Montebourg likened Switzerland's cantonal tax system to "banditry". He called on the EU to crack down on cantons that set low tax rates to entice companies and individuals to relocate from other countries. Mrs Calmy-Rey hit back at Mr Montebourg's criticism in the television interview. "The Swiss tax rules are transparent. It is up to the Swiss voters to decide if they should be changed. We don't need any advice," she said. The debate was inflamed by comments from the newly appointed Swiss Economics Minister, Doris Leuthard, who had criticised as "discriminatory" a system which, despite similar earnings, allows Mr Hallyday to pay only one-tenth as much tax as Swiss world tennis number one Roger Federer. According to Swiss newspaper reports both earn around SFr10 million ($8 million) but Mr Federer pays SFr3 million in taxes compared with Mr Hallyday's SFr300,000. Deals vary widely among Switzerland’s 26 cantons, but the basic formula is to calculate a minimum of five times the annual rental value of the foreigner’s home and his or her living expenses. That amount is taxed at an average rate of 30 per cent, although the rate is much less in some areas. Wide variations were highlighted in a recent KPMG report which showed Obwalden at 13.1 per cent, Schwyz at 15.6 per cent, Zug 16.4 per cent, Zurich 21.3 per cent and Graubünden 29.1 per cent. The deal is currently available to 3,600 foreigners who pay an average of SFr75,000 each in tax, earning Switzerland SFr300 million a year. Entertainers including musicians Phil Collins, Tina Turner and actress Isabelle Adjani, along with sports stars Michael Schumacher and Amélie Mauresmo, are among many foreign stars who live in Switzerland. British pop singer James Blunt and former United Nations secretary-general Kofi Annan are in the process of setting up domicile in Switzerland according to local media reports.