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Finnwatch: Some wealthy Finns cash in on investments tax-free

The watchdog said a legal loophole allows wealthy Finns to dodge capital income taxes by moving abroad.

katuelämää Lissabonissa
File photo of Lisbon, Portugal. Some states offer generous tax incentives to boost their own economies. Image: Ivan Nesterov / AOP

A study by human rights NGO Finnwatch found that Finns with annual capital incomes exceeding 50,000 euros tend to favour emigrating to a small group of countries offering significant tax advantages.

These countries are Portugal, Switzerland, Luxembourg and Singapore, based on data drawn from Statistics Finland between 2014 and 2018.

Finnwatch found that Finns in this capital income bracket were three to ten times more likely to move to these four countries than other taxpayers in the country.

"When individuals sell off capital accumulated here, Finland loses tax revenue," explained Finnwatch tax specialist Saara Hietanen in a statement.

Individuals can in theory spend decades accumulating stock portfolios in Finland and then leave the country without any legal obligation to pay capital gains tax to the Finnish state.

"Divesting investment assets in these countries is very lucrative," Hietanen told Yle.

Ministry did not support exit tax

Finnwatch is attempting to fuel the debate on whether Finland should instate an exit tax on wealthy individuals leaving the country. Earlier this year the finance ministry said it was not intending to establish such a tax.

Officials argued that such a levy would further complicate the tax system while only affecting a handful of people.

According to Finnwatch, Finland is one of just a few states in western and central Europe where it's possible to cash in on investments after moving away without owing any capital gains tax on accumulated assets.

Finnwatch said it hopes discussion on an exit tax will be considered in budget talks this autumn.

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