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Upcoming changes to the Portugal/Sweden Double Taxation Treaty (“DTT”)


Swedish pensioners residing in Portugal, under the Non-Habitual Residents’ regime (“NHR”) may start being liable to tax in Sweden on their pensions.

 Today, in Brussels, Portugal and Sweden’s Ministers of Finance are signing an amendment to the DTT executed between the two countries, with the objective of allowing Sweden the right to claim tax on pensions deriving from its territory.

 According to the information available at this stage, the DTT will remain in force and only a surgical amendment to the pensions’ clause will be made.

 Moreover, at this stage, the information available foresees that Sweden will be entitled to claim tax on all pensions after a transitional period of three years.

 If, during a three-year period counted from the entry into force of the new DTT, Portugal starts claiming tax on Swedish pensions, then Sweden will not claim tax. However, if Portugal keeps the currently existing exemption under the NHR regime and/or does not start claiming tax on pensions through any other mechanism, then Sweden can immediately – once the transitional three-years’ period is over – start claiming tax on the pensions.

 Such amendment to the DTT has been requested by Magdalena Andersson, Sweden’s Minister of Finance, already two years ago during an ECOFIN meeting. Nonetheless, so far, the Portuguese Government had made no visible efforts to meet Sweden’s goals.

 It is very important to note the signature of this agreement is only the formal beginning of the process to amend the DTT and it is still uncertain when a new DTT will actually be in force between the two countries (moment from which the above-referred three-years’ transitional period will start counting).

 In this context, we can bear in mind the timings of the renegotiation of the Portugal/Finland DTT, which began in 2013, a new treaty was even agreed on in November 2016 and Finland fulfilled all the internal formalities for the new DTT to go into force already in 2017, whereas Portugal did not. As a result thereof, Finland communicated the termination of the whole DTT with effects as of 1 January 2019.


Teresa Pala Schwalbach

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