Finnwatch, a non-governmental organization, reported that individuals with substantial property income from Finland are increasingly relocating to tax havens like Switzerland, Singapore, and the United Arab Emirates. Portugal, which was previously a popular destination, has seen its popularity decline due to the termination of a tax agreement with Finland, which previously allowed Finnish migrants to receive tax-free occupational and supplementary pensions.
The report, which analyzed migration trends of wealthy Finns from 2014 to 2022, found that Portugal fell from first to tenth place in terms of popularity. In contrast, destinations like Switzerland, Luxembourg, and Singapore saw an increase in the volume of high-income earners moving there.
Former CEOs of listed companies, who receive substantial pension payments, have also moved to Switzerland, where they are not liable for taxes on these payments in Finland. Additionally, it was reported that Finnish managers, who have sold their companies, can tax their capital gains in Switzerland at a very low rate.
Aside from Switzerland, affluent Finns are also increasingly moving to tax havens like Singapore, Luxembourg, the United Arab Emirates, and Cyprus, where capital gains are not taxed except in certain cases. The United Arab Emirates has been highlighted as a new favorite destination for wealthy Finns due to its lack of income and inheritance taxes on migrants.
The survey results suggest that tax planning influences the choice of relocation destinations and that deficiencies in Finnish legislation encourage individuals to move to tax havens before selling their assets, thus avoiding taxes on investment sales. Finnwatch proposes the implementation of a value-added tax on asset value increases accumulated during residency in Finland, even if the taxpayer moves abroad before the assets are realized. This could potentially generate between 0-50 million euros per year for the Finnish government, offsetting the capital income lost due to migration to tax-advantaged countries.
