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International student tax contributions in Estonia up 12.5% in 2019/20

International students across Estonia in work during studies added €10 million to the country’s treasury via income and social tax in the 2019/2020 academic year, while international graduates from Estonian institutions contributed €3 million, statistics have revealed.

International student expenditure on housing and daily life in Estonia totalled around €33m in the 2019/20 academic year. Photo: Unsplash

International students were more likely to work in foreign-owned enterprises than local students

The 5,520 international degree seeking students in the academic year 2019/2020 at institution’s across the country is the highest number ever. Initial statistics indicate that international degree students in Estonia fell by almost 300 in the 2020/21 academic year, to 5,236.

“Every year there are more and more graduates who stay working in Estonia”

Figures also showed that while 84% of local students worked during their studies, this dropped to around half of the total international students. However research has suggested that the ability to work in the country while studying is a key driver for international students selecting the country as their study destination.

“In addition to international students and graduates participating in the labour market and the tax revenue from it, their studies in Estonia also mean tuition, living costs and visits to Estonia by their families,” Eero Loonurm, head of the Study in Estonia program at the Education and Youth Authority reminded.

The International Student Barometer by i-graduate showed that international student expenditure on housing and daily life totalled around €33m in the last academic year, he added.

According to the barometer, 75% of the international students in Estonia suggested that working opportunities during their studies affected their decision to choose an Estonian university.

Previous data revealed international students in Estonia had contributed over €10 million in tax over the 2017/18 and 2018/19 academic years.

The latest statistics indicate a 12.5% increase in income and social tax contribution in 2019/20 from 2018/19 when international students added €8m to the treasury’s coffers.

Income tax contributions increased from €2.4m to €3.1m in 2019/20 and social tax from €5.6m to €7m.

However, the Covid-19 crisis has led to international students being “more likely” to lose their jobs than their domestic counterparts.

While 11% of local students lost employment in spring 2020 as a result of Covid-19, this grew to 17% of international students.

“It is important to say that young people were anyway in a less stable situation in spring 2020 all over the world. Jobs were gone in these fields which are typical part-time jobs for young people who have started their studies – such as accommodation, hospitality, entertainment,” Loonurm highlighted.

Those studying information and communication technologies, engineering, manufacturing and construction, and business, administration and law were most likely to work during studying.

Students of agriculture and health and welfare were least likely to work.

International students were also more likely to work in foreign-owned enterprises than local students, statistics showed, with IT, hospitality, and education companies being the most common employers.

Researchers also found that ICT and engineering, manufacturing and construction graduates are most likely to stay working in Estonia after completing their studies. Graduates from the 2018/19 academic year paid €1.2m in income tax and €2.4 million euros in social tax in Estonia

From the cohort of international graduating in 2018/2019, 57% of masters and 49% of PhD graduates stayed to work in Estonia the following year, Loonurm told The PIE News.

“Every year there are more and more graduates who stay working in Estonia,” he said. “Currently the main rule is that all non-EU students can stay in Estonia for an additional 270 days (nine months) after graduation to look for a job in Estonia. Once the job is found, they can apply for a temporary residence permit.”

Adding expenditure from housing and daily life, the economic impact on labour market along with tuition fees, transportation costs and indirect costs of family visits, the impact would exceed €60m per annum, Loonurm said.

However, the “most valuable input” from international students would be their academic contribution, he suggested.

Allan Padar from the Estonian Ministry of Education and Research agreed, but stated recruiting international graduates into the labour market “may be more effective than recruiting foreign labour”.

“Foreign students become accustomed to the local environment during their studies. There is also a social network during their studies, which makes it easier to enter and stay in the labour market after their graduation.

“The first goal of the internationalisation of higher education and foreign students is definitely the quality. We want the best students to come here and study. But the positive impact on the economy is definitely a great impact, since it affects positively the whole society in general,” he suggested.

“The main concern has been about retention of the international students”

The number of international degree students during the last decade has grown five times, Loonurm continued, and the main concern has become international student retention.

“Do all students know about the job offers in our labour market; do they know that if they have received a residence permit for study, they are permitted to work during their studies if working does not impede their studies and they continue to study full time.”

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