EP212 · Economy · first published 2023-09-21

Dividend tax and the equity savings account 2.0 | Victor Snellman | Negotiator 212

Victor Snellman, CEO of the Finnish Shareholders' Association, joins Sami Miettinen in September 2023. The load-bearing claim is structural: inside an otherwise progressive tax system, dividend taxation is regressive for the small investor — a private individual pays an effective rate above 40 per cent on top of corporation tax, while an owner above the 10 per cent threshold receives dividends tax-free. The other half is the equity savings account and its limits. Also: Euroclear's shareholder counts, an alternative use of Solidium's portfolio through call options, and the shareholder-meeting fight over Fortum's Solidium loan. The transcript is auto-captioning, which is disclosed.

Sami Miettinen · Sections: AI and the Economy + AI and Society

Dividend tax and the equity savings account 2.0 | Victor Snellman | Negotiator 212

Summary: Victor Snellman, CEO of the Finnish Shareholders’ Association, joins Sami Miettinen in September 2023. The load-bearing claim is structural: inside an otherwise progressive tax system, dividend taxation is regressive for the small investor — a private individual pays an effective rate above 40 per cent on top of corporation tax, while an owner above the 10 per cent threshold receives dividends tax-free. The other half is the equity savings account and its limits. Also: Euroclear’s shareholder counts, an alternative use of Solidium’s portfolio through call options, and the shareholder-meeting fight over Fortum’s Solidium loan. The transcript is auto-captioning, which is disclosed.

Guest, interest and source note

Victor Snellman is CEO of the Finnish Shareholders’ Association (Suomen Osakesäästäjät ry), trained as both an engineer and an economist. The recording is 21 September 2023.

Three disclosures:

• The guest is a lobbyist, and the episode is largely his organisation’s tax-policy programme. That does not make the arguments wrong, but it is worth reading as a programme rather than as neutral analysis. Snellman says so himself.
• The host is a party too. Sami Miettinen describes his own equity savings account, his British funded pension and his low-cost index funds. Neither gives investment advice, and they say so on air.
• There is no publisher caption track for this episode, so this article is based on YouTube auto-captioning. No verbatim quotation is used, and the figures were cross-read against the episode’s own chapter list. That chapter list has a gap between roughly 20:40 and 34:21; that stretch is written from the transcript.

1. The load-bearing claim: regression inside a progressive system

This is the episode’s structural argument, and it is testable — unlike most tax talk.

Finnish income taxation is progressive: the larger the income, the higher the rate. Snellman’s claim is that for listed-company dividends the logic inverts:

The effective total tax on the private investor is above 40 per cent once you include the corporation tax the company has already paid on every euro of that dividend. The top Finnish capital income rate, 34 per cent, is by Snellman’s account the third highest in Europe.

The core of the argument is not the level of the rate but the ordering: the smallest owner pays the most, the largest the least. Snellman’s phrasing is that the small investor gets a 15 per cent relief where a corporate entity gets a hundred.

This is the most valuable part of the episode for an article, because it is a claim about structure rather than a forecast about anyone’s intentions.

2. Avoir fiscal: what was removed, and why

Before the current system Finland had avoir fiscal, an imputation system. Under it a dividend was in practice taxed once: the corporation tax paid by the company was credited against the shareholder’s tax.

Snellman’s account of its end is the episode’s most interesting historical claim, and it should be marked exactly as he presents it — as an interpretation, not an established causal chain:

• The system was seen to favour Finnish shareholders, and it was argued under EU law that the credit should be extended to other EU member states.
• Instead of extending it, the credit was abolished altogether (2004–2005).
• Snellman’s characterisation is that the decision rested on a mistaken reading of EU law.

Sami adds his own recollection from the period when, as a junior analyst, he worked on the merger of Merita and Nordbanken: dividends paid by Merita-Nordbanken — today’s Nordea — were tax-free to Finns through the imputation system, and Swedish owners found this irritating. He connects that to the later headquarters debate.

This is specifically the speakers’ interpretation. Nordea’s move of its headquarters to Sweden (2018) has publicly been explained above all by the banking union and resolution fees. The link to avoir fiscal is raised in the episode as a question, and is worth reading as one.

The conclusion both agree on: the present system treats a listed company more harshly than an unlisted one. Taxation penalises exactly the property — liquidity and public ownership — that is otherwise held to be desirable.

3. What the Euroclear data shows

Snellman’s strongest empirical point is the time series of shareholder counts, because there tax changes appear in behaviour rather than in rhetoric:

• After avoir fiscal was abolished, the number of direct shareholders turned down.
• The arrival of the equity savings account in 2020 — under a left-led government, from preparatory work by the Sipilä working group — reversed the direction.
• There are now over a million direct shareholders in Finland, though some of these are entities rather than people.
• Roughly 327,000 equity savings accounts have been opened.

Two observations here are the least expected in the episode:

Children. Investing on behalf of children is growing, and children’s portfolios are structurally healthy. Snellman notes that roughly as much is saved for girls through the equity savings account as for boys — about 50/50 both in the number of accounts and in the amount of wealth. He regards the account as an equality measure for that reason.

Party politics does not predict the outcome. The equity savings account was introduced by a government you would expect to oppose it. That is a useful reminder that institutions come out of preparation, not proclamations.

4. Equity savings account 2.0 — what is missing

Snellman has a model, based on a Nordic comparison, of what the account would look like if it were built again. The current €50,000 cap is to be raised to €100,000 under the government programme; Snellman’s position is that no cap is needed at all.

The shortcomings he lists:

1. The size cap. Norway and Sweden have no equivalent limit.
2. Shares only. Funds, ETFs and bonds should be purchasable inside the account, as in Sweden, Norway and Denmark.
3. No currency account. With no currency account inside the wrapper, the bank takes a slice of every conversion. Sweden places no restriction on which currencies may be held.
4. No transfers of existing shares. Shares already owned cannot be moved in; they must be sold, taxed and bought again.

Point 2 matters most in practice, and Snellman’s argument on it is the strongest: for a beginner an index fund is a better first investment than a single share. The present rule forces a beginner into direct stock-picking at exactly the stage where they have the least experience. The design therefore pushes in the wrong direction on its own terms.

Points 1 and 4 also produce a concrete legal problem Snellman raises that is too technical to reach the headlines: the account can breach the law without the owner doing anything. If a company runs a rights issue, subscription rights — which are not shares — appear in the account. If a takeover offer contains a debt instrument — his example is Caverion — accepting it breaches the account’s terms.

Sami describes his own position: his portfolio leans towards low-cost index funds and the United States, and the equity savings account has forced him into individual shares. He also explains the account’s tax logic — gains are taxed only on withdrawal, and a withdrawal is taxed in proportion to the gain held in the account.

5. The counter-argument, and the answer to it

Snellman takes the objection from the left honestly: without a cap, the equity savings account would be a privilege of the rich.

His answer is that the money would not come from nowhere but from deposits: Finns hold roughly €110 billion in bank accounts. If a meaningful share moved into shares and funds, the state’s tax take would improve — deposit balances currently yield it almost nothing.

He also gives the scale, which is the episode’s single most eye-opening figure: Finnish shareholders receive about €1.4 billion in dividends from listed companies and about €4 billion from unlisted ones — even though the market capitalisation of the exchange is many times larger. The dividend flow is structurally on the unlisted side, and taxation explains part of that.

On capital flight Snellman is moderate in a way worth recording: he notes that leaks such as the Panama Papers turned up very little Finnish foreign ownership. The claim is therefore not that wealth is already fleeing, but that people and capital move freely if given a reason.

6. Buffer, inheritance and mindset

The middle of the episode is less technical and is best read as both men’s worldview.

The shared premise is that a small buffer of your own is a liberating factor — it makes it possible to change jobs, start a company, or walk away from a bad manager. Sami calls his own equity fund portfolio a “happy May Day” fund in precisely that sense, and Snellman adds that society benefits from private safety nets too: they do not replace the public one, they reduce the load on it.

Snellman refers here to research according to which money worries lower measured IQ by about 20 points, and attributes it to a publication by Danske.

This should be treated with caution. The well-known result comes from the research group of Mani, Mullainathan, Shafir and Zhao in Science in 2013 — not from a bank — and it measures the narrowing of cognitive bandwidth under scarcity, not permanent intelligence. The direction of the effect is well supported in the literature; the precise “20 points” is the result of one experimental setup, not a constant. The underlying point — financial stress degrades decision-making — survives this, but the figure is not worth passing on in that form.

On inheritance tax both agree, and the argument is about cash flow rather than ideology: in an estate the tax falls due in cash even though the wealth sits in shares, housing or a business. The consequence is that working businesses and homes get sold out of necessity rather than choice. Snellman predicts that a large amount of housing wealth will come to market over the coming years through generational turnover and will partly find its way into shares and funds — because some of the heirs already own a home.

Attached to this is one honest concession in the episode: Finland has exactly one tax-free form of ownership, an owner-occupied home. Both think other asset classes should be brought closer to that treatment — notably, neither proposes tightening the treatment of the home.

Sami also offers the generational point, which is the sharpest political observation in the episode: an ageing Finland creates a conflict of interest between an older generation receiving pension benefits and a younger one that invests more in shares and expects fewer benefits.

7. Diversification without the jargon

In between sits a short, untechnical explanation of why diversification works, and it is the best teaching passage in the episode:

In a one-share portfolio, that share halving halves your entire capital. In a hundred-share portfolio it is unlikely that all of them halve at once — particularly if they sit in different industries and different geographies.

From which comes the episode’s most memorable formulation: a casino is a negative-expectation game; the stock market is a positive one. The long drift of equity markets is upward. That is not a promise about any single year or any single share, and both of them say so.

8. Solidium: selling without selling

This is the episode’s most original stretch, and the idea is Sami’s.

The starting point is a political reality both accept: when the state sells a holding, it is never bought back. A sale is therefore a politically expensive decision, and the sale price always becomes a dispute after the fact.

Sami’s proposal: Solidium would sell call options on the shares in its portfolio rather than the shares themselves.

The structure in plain terms:

• The state owns, say, a given number of Neste shares.
• It sells an investor the right to buy them at a set price on a set date.
• The buyer pays a premium for that right — in Sami’s example a sum in the billions — now.
• The contract separately defines whether the option holder receives dividends during the holding period, and whether the right is exercisable only at expiry (European) or at any time (American).

The political appeal is obvious and Sami states it directly: the minister looks good in both outcomes. If the option expires unexercised, the state kept the shares and got the premium for free. If it is exercised, the sale happened at a price agreed in advance and accepted by the market.

Sami ties the idea to his own experience with exchangeable bonds, where a company issues debt convertible into another company’s shares: the value of the option reduces the coupon, and the structure is in effect a partly pre-agreed sale. He says he did the first Nordic exchangeable bond at Credit Suisse, for a Swedish forestry company.

Snellman does not buy the idea uncritically, and his objection is technical and apt: liquidity decides. For a liquid share the size of Neste a five-year option can be structured and priced; for a smaller company there is no market, and you will not get the option’s full market price.

9. Fortum’s Solidium loan and Ahlström-Munksjö: where advocacy is needed

The end of the episode is a set of examples of what the Shareholders’ Association does, and it explains Snellman’s own role.

Fortum and Solidium. An extraordinary general meeting of Fortum considered a financing arrangement in which Solidium lent to Fortum. Snellman’s and Sami’s criticism is aimed at the terms: the interest rate was, in their characterisation, payday-loan territory at around 14 per cent, with a share issue element attached. Snellman’s argument is procedural rather than political — and that is the form in which it is worth reading:

If a general meeting has two known alternatives and one is better for shareholders, it should take the better one. Here the de facto majority owner arranged a transfer to itself.

Snellman concedes directly that Finnish taxpayers may have benefited — Solidium’s gain is ultimately the state’s gain. The objection is not economic but one of governance: a majority owner should not price an advantage for itself at the minority’s expense, even when the majority owner is the state.

Both extend the criticism to the same wider target: the competence of state ownership steering, referring to the Uniper case.

Ahlström-Munksjö. Snellman describes a takeover situation in which, by his account, the minority shareholder’s position was at risk and challenging it would have been onerous. He describes his organisation’s role self-deprecatingly as a bird of ill omen that turns up uninvited and unannounced.

The generalisation he draws is useful to any investor regardless of membership: a controlling owner has games of its own. If a single shareholder obtains an unfair advantage by playing the situation, the problem is not merely moral but contrary to good practice — and that is precisely the category on which minority protection is built.

10. Numbers as leverage, and what has actually changed

Snellman’s closing conclusion is political arithmetic: with over a million direct shareholders and hundreds of thousands of equity savings accounts, this is a large enough slice of the population that decision-makers listen.

He offers a concrete sign of it: the government’s declarations of interest read, in his view, entirely differently from the previous term’s — several ministers own shares, funds and businesses.

This is a good place to end the article with a caveat more honest than the episode’s own conclusion: what a declaration of interest contains tells you about a minister’s wealth, not about what they will decide. That a decision-maker owns shares predicts their policy more weakly than the episode implies — and Snellman’s own best example argues against it: the equity savings account was introduced by a government nobody expected it from.

The strongest argument in the episode does not need that support. It is the structural one: the small investor pays the most and the largest owner the least, on the same dividend.

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