In today’s Q1 earnings call for Nýherji, CEO Finnur Oddsson, took a jab at Icelandic policies regarding tax refunds based on investment in research and development. Finnur discussed the growth of Tempo, and why management decided to focus their growth in Montreal.
“The reason is very practical: developing technology in Montreal is much less expensive than in Iceland,” Finnur told investors.
Nýherji is the parent company of Tempo that creates productivity plugins for Jira. The company, with two-digit revenue growth over the last quarters, and aims to invest in product development. Q1 2016 Tempo saw 40% YoY growth, and Finnur says they’re expecting similar growth for Q2.
“Salaries are probably, if we look at the whole, lower in Montreal than in Iceland. There’s a better supply of experienced talent and graduates from prestigious schools in Montreal, although we can’t really complain about the talent we have here.”
“What’s extremely important is that support of research and development is much, much better in Canada than in Iceland,” Finnur said. “Here [in Iceland] we can get a 20% refund on a maximum of 100 million ISK per company. In Canada the refund is 30-40% with no maximum.”
“If we’re going to invest 100 million in research and development, and have to choose between Canada or Iceland, it’s 30-40% less expensive to do it in Canada.”
“Let’s say it this way: The Canadian government has decided that it’s important to draw jobs like these to the country,” Finnur says.
The Finance Ministry of Iceland currently has a bill before Alþingi to increase the refund. The proportion refunded remains the same (20%), but the elegible expenditure rises to 300 million. That means that companies that invest 300 million ISK in R&D can receive 60 million in refunds.