Tax-free Portugal attracts Finnish pensioners

09 Feb 2015

Tax-FreeThe white beaches and tax exemptions offered by Quarteira are among the main factors that attract retirees from other European countries to Portugal.

The waiting staff bring out additional tables as more and more people turn out for a lunch meeting of the Finnish Society in Algarve, southern Portugal.
Raimo Luokomaa, the chairperson of the society and a long-time resident of Portugal, is surprised by the recent popularity of the monthly meetings. “One-third of them are people I don’t know,” he estimates as roughly one hundred retirees sit side-by-side around the tables of a restaurant in the town of Quarteira.
Most members of the nearly 25-year-old Finnish Society in Algarve are retirees living in the temperate coastal region of Portugal. The number of members has increased by more than a couple of hundred over the past year.
In fact, so many have contacted the society by e-mail to enquire about moving to and living in the south-westernmost country of Europe that the society has been unable to reply to the enquiries in time, reveals Maija Katila, the executive director at the Finnish Society in Algarve.
“We weren’t prepared for such a sudden flood of e-mails. The enquiries began to increase last autumn and still continue to do so,” she tells. Katila is responsible for organising activities and managing the contact network of the society.
Known for its sunshine, long beaches and low cost of living, Portugal has attracted elderly people from European countries with higher rainfall and cooler weather for decades. Recently, however, retirees have been drawn to the country also by the possibility of enjoying their pensions tax free.
Portugal has sought to attract new residents by granting retirees who move to the country permanently a ten-year exemption from taxes on their pension income under certain conditions.
The country has vested its faith in the purchasing power of retirees as it seeks to patch up its fiscal deficit and cope with the lingering debt crisis. The retirees are expected to buy cars and real estate as well as boost the cash flows of local shops and restaurants to the extent that they will benefit the local economy despite their tax-free status.
“I’ve received tens if not hundreds of phone calls not only from Finland but also from Finns living in Morocco, Turkey and Spain. We’ve also had to provide services to holiday-makers who’re considering retiring here for tax reasons,” lists Luokomaa.
The Finnish Society in Algarve refuses to officially comment on the tax exemption scheme.
Several retirees who have moved to Portugal recently have showed up for the lunch meeting. They are in high spirits: speeches are made, songs are sung and toasts are made.
Luokomaa assures the newer members of the Finnish community that they will make new friends soon and that no one will be left alone.
Finns began to migrate to the resorts of Portimão and Quarteira in Algarve in the 1980s as a result of the winter package tours offered by Finnmatkat, says Katila. “Despite the current high number of enquiries, only few are eventually able to move here,” she reminds.
The chatter from the tables picks up as the waiting staff bring out the dessert puddings and as people who have moved to the region recently try to get to know those who are already familiar with it. Few, however, dare to discuss their decision to emigrate from Finland in public.
“Definitely not. We’ve got so many jealous neighbors in Finland,” says one woman.
The reluctance of the emigrants stems from the public outrage that emerged in Finland after Maarit Toivanen-Koivisto, a major shareholder in Onvest, announced in an interview with Helsingin Sanomat late last year that she and her family will move to Portugal in order to avoid inheritance tax.
The outrage ultimately heated up to the extent that Antti Rinne (SDP), the Minister of Finance, branded the tax exemption scheme introduced by Portugal as a flaw that must be corrected in an interview with Iltalehti. Finland has consequently launched negotiations with Lisbon over a new bilateral tax agreement.
Timo, one of the retirees in Quarteira who decline to comment on the matter with their full name, estimates that the actions of Rinne are due to the looming parliamentary elections. He points out that Finnish retirees in Portugal have also before been generally exempt from taxes in Finland, but now the “mill of the jealous” is being fueled by reports about the tax scheme.
“How does the fact that a marginal group of senior citizens move here harm Finland? They will in any case pay 1.5 per cent in health care tax to Finland, although they don’t use the roads, streets or health care system,” he argues.
“The Ministry of Finance should focus on the major companies that file their taxes abroad,” he says.

Pilvikki Kause – HS
Aleksi Teivainen – HT
Photo: Ana Brigida

Finnish sea tech plans big splash in the world’s oceans

With the new Merit project, Finland aims to bring together its maritime and ICT industry expertise to become a frontrunner in smart maritime industry. iStock / LifesizeImages

Finish Sea 1Finland may be known for Nokia, Angry Birds and forests, but where the country wants to tap next leaves the land behind altogether: the smart maritime industry.
There aren’t many ships today that sail without technology and its role in the maritime industry is growing fast. Tightening safety, environmental regulations and rising fuel prices are driving the development of new solutions which improve processes and efficiency.
This is the domain of the ‘smart maritime industry’ and in particular its integration of information communications technology (ICT) which is used for everything from new ways of applying weather data to digitalisation of harbour bureaucracy. Or, in future, even for fully automated vessels controlled from the mainland.
Finland wants to be at the forefront of creating these solutions. Step forward is the country’s new ‘Smart Maritime Technology Cluster’, the Merit Project. The ambition of Merit is to melt the maritime industry, ICT services, the Internet of Things (IoT) and startups together to create a Finnish maritime IT cluster that caters to international shipyards and the offshore industry as well as shipping companies and ports.
“The smart maritime industry is built on two strong Finnish industry sectors: the maritime industry and ICT. Finland is top of the class in both,” says Jussi Nissilä, Senior Analyst at consultants Oxford Research which recently conducted a study on opportunities in the sector.

Discovering top expertise

Finish Sea 2While there is no shortage of Finnish maritime knowhow, the challenge is to bring together very different industries, working cultures and even terminology. The Merit Project, led by Finland’s capital city Helsinki and funded by the Finnish Ministry of Economy and Employment, aims to knock down these barriers by first offering a platform for networking and cooperation.

“Someone told me 17 forms have to be filled in to ensure a container is carried from one harbour to another,” explains Eniram’s CTO Jussi Pyörre as an example on why smart maritime technology is needed. “Even if it isn’t our core competence, we could help [as part of the Merit cluster] to create solutions for these kinds of problems.”
The next step is to enhance the international visibility of Finnish maritime expertise, support companies in finding new markets as well as co-develop new products and services for the maritime industry.
“The unique approach here is that we are actively seeking growth and new ideas from the ICT side by bringing together players from two different fields,” explains Nissilä. “It is a competitive market, but there aren’t many countries which have profiled themselves as the frontrunner in the smart maritime industry.”
The potential of doing so is huge: in Finland alone the maritime industry is worth in excess of five billion euros while around 90 percent of world trade is transported by the shipping industry.
Finland is already home to a number of leading companies in the maritime industry, including global giants like Wärtsilä and ABB in engines and propulsion systems. Furthermore many of the world’s biggest cruise ships have been built in shipyards in Western Finland while Aker Arctic, a specialist in arctic seafaring conditions, runs the only privately owned ice model testing facility in the world in Helsinki.
Several smaller companies are making their mark in maritime technology, such as optimisation specialists Napa and Eniram. Now Merit is bringing together their maritime expertise with the ICT sector.

Eniram believes in cooperation

“The great thing about Finland is that we are a small country and can efficiently do these kinds of projects [such as Merit] without it becoming too bureaucratic,” says Jussi Pyörre, Chief Technology Officer at Eniram.
Eniram is not only a member of the Merit project but one of the most successful examples of recent Finnish smart maritime expertise. The company, founded in 2005, specialises in energy management technology and uses data analytics to reduce seafaring costs and environmental impact:
“Our system is installed on 250 vessels all around the world. Last year we helped to save 60 000 tonnes of fuel in these vessels,” Pyörre explains. “That equals to the emissions produced by 40 000 cars in a year. We have 70 employees, so each of them is responsible for removing over 500 cars from the planet when it comes to emissions.”
Eniram estimates there are approximately 60 000 ships globally that could use its technology and this is also where Pyörre sees the main benefits of the Merit project: targeting potential customers and developing new services together.
“What customers need are solutions to their problems, not software. If we can offer a part of the solution, we are more than happy to be included in a package which is offered together with other companies,” Pyörre describes. “In the [Merit] cluster we could together create a complete solution for the customer.”
Furthermore, these ideas could be tested in Finland. Notably Oxford Research foresees a test environment for smart maritime technology which will be up and running in Finland inside the next four years. This could be a test harbour or cargo vessel for trying out future navigation and communications or other ICT and IoT tools in real-life conditions.
Merit’s long term goal is to turn the smart maritime industry into recognisable international brand similar to that of Finland’s mobile gaming industry. Because the biggest splash doesn’t always need to come from an Angry Bird.
The maritime industry reFinish Sea 3presents a huge but fairly traditional market in need of new ways of optimising and improving its processes.




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