Business Policy should be about Talent, not Tax Breaks

Executive Summary

Talent, not tax, drives where high-tech firms choose to locate. High-value companies follow deep pools of engineers, researchers and skilled workers. Amazon’s HQ2 decision showed this clearly: it chose the most talent-rich city, not the biggest subsidy. In Europe too, firms like ASML, Apple or NXP expand where skills are dense and ecosystems thrive, not where headline tax rates are lowest.

Dutch fiscal policy illustrates a wider European dilemma. For decades, the Netherlands sought to attract and retain multinationals through broad tax advantages — from the innovation box to dividend-tax debates. Yet Shell and Unilever’s headquarters relocations to the UK revealed the limits of this approach. Dutch employment barely changed, suggesting that defending corporate structures is no substitute for nurturing long-term capabilities. Across Europe, similar tax bidding wars have fragmented the single market and diverted fiscal space from education and innovation.

Europe’s competitiveness gap with the US reflects an innovation gap. The transatlantic growth difference stems mainly from the scale of the US tech sector. The Netherlands performs strongly by EU standards — home to ASML, Adyen and NXP — but it still lags leading ecosystems in scaling start-ups and financing innovation. European strategies that prioritise tax incentives over talent formation risk cementing that lag.

A talent-first strategy is more effective — and more European. Firms weigh quality-of-life factors alongside costs: education systems, urban amenities, health care, and mobility. Amsterdam’s pull for global tech talent reflects these broader assets. Investing in universities, research networks and liveable cities strengthens both Dutch competitiveness and Europe’s collective capacity to attract knowledge-intensive activity.

Underinvestment in higher education undermines this strategy. Funding per student in Dutch universities has fallen, workloads have risen, and tertiary budgets face further cuts. Redirecting part of the fiscal effort from corporate tax relief toward higher education and research would better support productivity, innovation, and Europe’s long-term technological sovereignty.

Policy recommendations

1. Shift from generic tax advantages to talent investment. Reallocate fiscal room from corporate relief toward education, R&D and research infrastructure.

2. Make talent attraction a national and European objective. Align migration, education and innovation policies to deepen the EU-wide skills base.

3. Invest in places where skilled workers want to live and stay. Improve housing, mobility and urban services in Dutch and European tech hubs.

4. Strengthen the start-up and scale-up pipeline. Expand venture finance and EU coordination to help firms grow within Europe.

5. Evaluate competitiveness policies by evidence, not anecdotes. Measure success by innovation and productivity outcomes, not by corporate lobbying or headline tax rates.