Portugal in Sweden tax row
Sweden says it will revoke a tax agreement signed with Portugal in 2019 that enabled it to start taxing Swedish retired citizens who have moved to the country in recent years.
Portugal and Sweden had an overall tax agreement to avoid taxation for pensioners moving their tax residence to Portugal since 2002, but in 2019 signed an agreement by which its citizens could be taxed on their pensions.
Stockholm has already ratified the agreement, but Lisbon had not yet done so after two years.
The Non-Habitual Resident tax regime in Portugal and a tax agreement signed with Sweden made Portugal a tax paradise for Swedish pensioners.
The agreement aimed to avoid double taxation on income for those who live in another country which is not their country of origin.
The Swedish minister of Finance presented two bills to the Swedish parliament on Monday (the other was with Greece) that will end the tax benefits by the end of 2021.
Magdalena Andersson says that there is still a possibility for Sweden to go back on its decision if Portugal guarantees that the “agreement is a reality,” but only if the Portuguese government acts now.
“We simply can’t sit back and wait while we see nothing is happening. It is a tax injustice when people that have millions of euros in income on moving to Portugal do not pay income tax (IRS), while non-retired people in Sweden and in Portugal pay taxes,” the ambassador said in an interview with Público.
The Portuguese government did offer to tax Swedish pensioners at 10% on their incomes which Sweden says is too low, arguing that there are plenty of Portuguese pensioners who pay more tax than that and are not in receipt of considerable amounts of income.