It will be a quiet affair. Just Johnny Hallyday, France's greatest rock star; his 31-year-old wife, Laeticia; their adopted Vietnamese-born toddler, Jade; a few close friends; a modest £3m timber chalet, still surrounded by builders' rubble; and a New Year 'reveillon' celebrated for the first time as a citizen of Switzerland and a tax exile.

In the streets and fine houses around the three-storey, six-bathroom mansion- the 63-year-old's Christmas present to himself - the beautiful people of Gstaad, the Swiss resort, will also be partying. There are the private parties, the chic nightclubs, and of course the massive fireworks and son et lumiere display, viewed best from the balconies of the Palace Hotel's rooftop penthouse suite (£12,000 per night) preferably after a meal at the Chesery, where Robert Speth, the Michelin-starred chef, will be serving a £175 meal of half a dozen courses culminating in French cheeses stuffed with white truffles and assorted desserts (wine not included). 'It's sunny every day here,' said Speth. 'It's life in the sun.'

A large number of the world's richest people appear to agree. The official motto of Gstaad, perched beneath stunning mountains at the bottom of a perfect Alpine valley in the German-speaking canton of Bern, is 'come up and slow down'. The unofficial motto, according to one long-term resident, the first wife of a major European property developer, 'be rich... but be discreet'.

'This is the place where you come if you are very, very rich and have no wish or need to show it,' the 55-year-old said, before adding that 'a few parvenus' were 'spoiling things a little at the moment'. Whether she meant Elizabeth Taylor, Sean Connery, Elle Macpherson, Mohamed al-Fayed, and Bernie Ecclestone, the Formula One boss worth £2.5bn, or Taki Theodoracopulos, the right-wing journalist and socialite, all of whom are among the 3,000 residents of Gstaad, was not immediately obvious.

But what is clear is that the arrival of Hallyday, France's 'Elvis', in a helicopter in the village might have been luxurious but it was far from discreet. Though Gstaad residents shrugged, Hallyday's compatriots did not - his move provoked screaming headlines and a major political row back home.

In stark contrast with France, where heavy taxes punish big earners, Switzerland imposes no wealth tax and the state takes only part of the annual income of rich foreigners. In addition, individual cantons can arrange single 'flat tax' arrangements with the very rich.

Hallyday will join an estimated 100,000 French citizens, including tennis star Amelie Mauresmo, racing driver Alain Prost and singer Charles Aznavour, now enjoying fondue, the Alps and fine watches (Gstaad boasts Rolex, Cartier and Patek Philippe shops). According to Francois Micheloud, a Swiss tax expert, Hallyday would be paying up to 60 per cent of his estimated £4m annual earnings to the exchequer in France. His tax bill in Switzerland is certain to be considerably less - it could be as low as £105,000.

Tax is now a major issue in the run-up to next year's presidential elections in France, which explains in part why the decision of Hallyday, a vocal supporter of Nicolas Sarkozy, the Interior Minister and right-wing candidate, is so controversial. Socialist candidate Segolene Royal sneered that she prefers to have friends who don't leave France to live in tax havens.

Sarkozy snapped back that Hallyday was only forced to leave by left-wing laws that meant France welcomed only those who have 'no papers, no training... and no desire to succeed'.

But Gstaad is more than just a fiscal paradise, according to locals, not least, according to Speth, because 'you pay more tax than in Monaco'. 'We are not like St Moritz, which is a town,' he said. 'Hallyday is like a new friend, a new member of the family.'

Roger Seifritz, director of Gstaad's tourist office, insists that, as a high proportion of local people work in traditional agriculture, the atmosphere is more 'authentic'. 'It keeps the valley in touch with real life,' he said. 'That's one reason why rich people come here. It is what life used to be like, and they like that.'

Life in Gstaad once had a rather British flavour. David Niven based himself in the valley. After her divorce, Princess Diana was a frequent visitor - Dodi al-Fayed, had a chalet. The scene is increasingly cosmopolitan. Michael Jackson goes often and film director Roman Polanski is building a new chalet. 'It's a lovely little spot,' said Daniel Angeli, Hallyday's personal photographer, who introduced the star to the valley 10 years ago.

But not all are convinced that Hallyday has made the right decision. The reaction in the Swiss press has been notably negative. 'Johnny is simply going to bore himself to death', said Peter Rothenbuhler, the editor of Le Matin.