Considering how technology- and science-intensive economic activity has become, it is obvious that highly qualified workers, whose competitive advantage is their know-how and whose job it is to solve non-routine problems, are a valuable resource to every country. Their knowledge, skills, and abilities are valued in every developed country. Therefore specialists are very mobile internationally, having the advantage of being able to choose a workplace which offers them the most convenient and appropriate conditions. All developed nations are competing for a highly qualified workforce.

With this project, we sought to examine the impact of those foreign specialists on the Estonian economy and tax revenue. We focused on foreign specialists and managers who work in ICT, science, and computer science. Altogether 2,981 foreigners were working in such positions in 2019.

Those specialists are highly paid, and their incomes are therefore relatively highly taxed. In 2019 Estonia accrued almost 37 million euros in social and income taxes from foreign specialists. At the same time, the contributions of foreign specialists to the Estonian economy cannot be reduced to their resulting tax revenue, because:

• foreign specialists help Estonian companies to generate added value, the companies would not be able to generate themselves as those specific economic activities would remain undone;
• foreign specialists spend a part of their income in Estonia, thereby boosting the local economy, generating even more added value, and generating additional tax revenue.

To fully consider those impacts, we used an economy-wide equilibrium model.  The results of the analysis showed that if we only consider direct taxes paid by foreign specialists, we underestimate their tax contribution by almost a half. Suppose we add up the direct income-related taxes paid by foreign specialists and their generated added value. In that case, we find that the total tax revenue of foreign specialists in Estonia in 2019 was 74.5 million euros. That amount is equal to nearly twice the annual budget of the city of Viljandi.