Finnish startup community chief economist Youssef Zad.


The Finnish startup community organized a tax seminar on Thursday, March 9 in Helsinki, where they presented a tax survey conducted by the community. The survey examines the relationship between the migration of top talents and innovators and taxation based on the existing literature. Additionally, the survey presents the tax incentives used in countries that compete with Finland for skilled labor and companies.

According to the survey, tax incentives have an impact on the migration of specific groups, such as patent-holding top innovators and other high-income individuals.

Youssef Zad, the chief economist of the Finnish startup community, stated that several studies have shown that high-income immigrants and top innovators react strongly to changes in income taxation and R&D tax credits. These are the people whose skills are essential to the ability of businesses in the region to innovate and increase productivity. These are also the people that Finland needs urgently, especially now that the strong increase in R&D expenditure under the R&D funding act requires improving the availability of skilled labor. Global competition for innovators is intense, and they are not queuing up to come to Finland.

High taxation also has its advantages: it funds critical public services that can enhance Finland's attractiveness. We must hold on to such critical welfare services. "Finland's economy is rapidly increasing its debt, and therefore any potential tax cuts must be channeled carefully to avoid further weakening of public finances. The literature also shows that at least in the big picture, income taxation does not affect the migration of skilled labor. In other words, I do not see it reasonable to cut income taxation at all income levels in Finland, at least in fear of labor leaving elsewhere. In the survey, we discuss limited incentives for high-skill and income-level labor that moves to Finland. As a concrete policy change, we should consider increasing the incentives for key personnel taxation," Zad added.

Key findings of the survey:

  • The importance of top innovators and skilled professionals for the national economy is significant.
  • High-income immigrants and top innovators react relatively strongly to tax incentives.
  • High taxation also has its advantages: it funds critical public services that can enhance the country's attractiveness. However, the financing base of the public sector and the reduction of the need for borrowing can be achieved by supporting strong economic growth. Therefore, we must create a tax-competitive environment in Finland. This way, we can attract the skilled labor force that Finland desperately needs to compete globally.