​​Preferential Tax Schemes and High-Skilled Immigration: Lessons for Finland

Antti Kauhanen and Olli Ropponen

No 168, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract High-skilled immigration has consistently demonstrated positive effects on firm performance, innovation, and productivity, while generally avoiding adverse impacts on native wages or employment. Consequently, many countries offer preferential tax schemes for highly skilled migrants. Recent research from the Netherlands provides compelling evidence on the impact of such schemes. In 2012, the Dutch system underwent reform, replacing a subjective “scarce skills” eligibility criterion with a transparent and relatively low income threshold. This reform significantly increased migration among mid-level earners, illustrating that migration reacts strongly to increased net-of-tax income and underscoring the importance of clear, predictable rules. We suggest that Finland should extend tax relief for highly skilled immigrants beyond the highest earners and consider implementing graduated rates.

Keywords: Skilled Immigration; Preferential Tax Scheme; Migration Elasticity; Key Employee Act; Finland; Netherlands (search for similar items in EconPapers)
JEL-codes: D24 J31 J61 O31 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2025-11-18
New Economics Papers: this item is included in nep-acc, nep-eur, nep-mig and nep-pbe
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