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Berlusconi family Swiss house plans cause stir

Flora Bartolini's house is undergoing extensive renovation Keystone

Swiss officials have announced they are to investigate the sale of a house in a popular tourist area to the family of outgoing Italian Prime Minister Silvio Berlusconi.

This content was published on April 28, 2006 - 19:41

The house, in the alpine village of S-chanf in canton Graubünden, belongs to Berlusconi's mother-in-law, Flora Bartolini, who says she cannot understand what the fuss is about.

Bartolini, the mother of Berlusconi's wife Veronica Lario, acquired the imposing residence – a former bank - in the beautiful southeastern Engadine region in 2004. It is said to have cost SFr2 million ($1.6 million).

According to press reports, the building is currently being extensively renovated and will include an underground car park for ten cars, a lift and eight bathrooms.

The controversy surrounds how Bartolini was able to get Swiss residency and therefore the right to lump-sum taxation – which is granted to foreign nationals who have residence in Switzerland but do not work in the country – without having lived in her new house.

S-chanf's mayor has confirmed that Bartolini was granted residency in 2004. The right to lump-sum taxation was confirmed by canton Graubünden in the same year.

Tax perk

Lump-sum taxation is a tax perk granted to around 3,700 wealthy foreigners a year, allowing them to pay less than people of the same means under ordinary taxation.

The political left has long been fighting for abolition of the perk, which has benefited other famous rich foreigners resident in Switzerland, such as singer Tina Turner and racing driver Michael Schumacher.

Last October the Swiss parliament again rejected a parliamentary initiative to abolish lump-sum taxation.

The Graubünden authorities first want to find out how Bartolini was granted residency rights. Berlusconi's mother-in-law lives in Bologna and is said to have hardly set foot in S-chanf.

According to Markus Haltiner, deputy head of the canton's police force and civil law department, it is forbidden to have a residency permit for two years without having lived in the country.

Another issue is whether the house is a primary or secondary residence. If it were a second home, it would be subject to Lex Koller, a law designed to limit the number of foreign residents owning property in Switzerland.

Investigation

The department announced on Monday that it would be investigating the affair.

"Until now our information has only come through the media," said Haltiner. "We will therefore be sending a letter to the interested parties to allow them to take a stand on this case."

"If Mrs Bartolini does not effectively reside in S-chanf, residency should be withdrawn or revoked."

For Andrea Hämmerle, parliamentarian for the centre-left Social Democrat party, if there has been any form of abuse, the Graubünden authorities should "intervene and demand that the tax concessions unjustly granted to Flora Bartolini be reimbursed".

"The 'chaos' surrounding Bartolini in any case demonstrates a super argument for abolishing lump-sum taxation – it's a very unfair system with regard to other taxpayers," added Hämmerle, who represents the region.

Fuss

For her part, Bartolini told Wednesday's edition of the Italian newspaper, La Repubblica, that she could not understand the fuss about her house, which she said was a gift from her daughter.

She added that the authorities wouldn't find anything illegal and added she was planning to spend long holidays at the house after it was finished.

In Engadine the affair has provoked mixed reactions.

Some complain about the sale of houses to foreigners which are only lived in for a few weeks a year and drive up prices for the locals.

But others are looking forward to an increase in tourism in the area. The house is already said to be proving a tourist attraction for Italian tourists on holiday in the region.

swissinfo

Key facts

Lex Koller is the name of a law limiting the number of foreign residents owning property in the country.
Cantons are only allowed to authorise the sale of 1,400 secondary residences for foreigners per year.
In Switzerland secondary residences make up 12% of houses.
In canton Graubünden, they make up 37%.

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In brief

Lump-sum taxation is granted to rich foreigners who live in Switzerland but earn their money outside the country.

Around 3,700 foreigners benefit from the tax perk, which is granted in around ten cantons.

It is not calculated on the basis of income and assets as is usually the case for taxes, but takes into account rental value of the house and real estate income.

Beneficiaries usually pay less than they would under the normal tax system.

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