Sweden, after Finland: avoiding international double exemption
The Swedish government is trying to put an end to the “Portuguese tax paradise” for its pensioners. At the beginning of September, news appeared that the Tax Authorities of both countries would re-evaluate the conditions of the agreement signed between the two countries in 2002, to avoid international double taxation. The news was considered by Magdalena Andersson, Swedish Finance Minister, as a political victory, according to the Portuguese Jornal de Negócios.
Sweden is complaining about the Non-Habitual Residents, a status given by Portugal unilaterally to foreign expats living in the country for a certain amount of time. The Non-Habitual Residency is, effectively, a way for expats and pensioners living in Portugal to escape partial or total tax paying. This, combined with the exemption that Swedish pensioners were benefiting at home, was giving these people the opposite of double taxation: an international double exemption.
The Swedish government is saying that, if Portugal refuses to revise its policy, a special tax will be created to compensate for this situation. As usual, the Scandinavians are very strict towards their tax policies.
Portugal: a tax haven?
A few months ago, news came out that the Finnish government, having Portugal and Finland an agreement in place of this same nature (to avoid double international taxation), was moving to drop it, has the pensioners were getting equally exempt of paying taxes.
The Non-Habitual Residency status is, effectively, a way for expats and pensioners living in Portugal to escape partial or total tax paying. This policy, enabled to attract foreign investment in real estate and especially to bring people to spend their time in Portugal, has earned the consensus of the majority of the political parties in the Portuguese parliament. In spite of the current left-wing government (a Socialist supported by the two far-left parties, the Communists and the Left Bloc), this capital-designed policy is showing no sign of being at risk, even if the Left Bloc has complained about it after the Swedish government comments.
Portugal is following a deliberate strategy to turn itself into the best place possible for you to spend your time.