Termination of double taxation agreement between Portugal and Sweden

The Double Taxation Agreement between Portugal and Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with regard to Taxes on Income was signed in Helsingborg on 29th August 2002.

By 16th June 2021 the Ministry of Foreign Affairs of the Portuguese Republic received from the Swedish Authorities a communication of termination of the referred Agreement.

The termination took effect as of 1st January 2022.

The Swedish authorities had expressed concern regarding the fact that Portugal initially did not tax the pension income of Swedish pensioners who moved to Portugal and were Non-Habitual Residents (NHR).

Although currently a flat rate of 10% is applicable to foreign pension income received by NHR in Portugal, this measure was not enough to keep the Double Taxation Agreement in place between the two countries.

The termination of the Agreement will have consequences related with all Swedish sourced income (for instance, pension income, capital gains, dividends) and may raise double taxation issues, meaning such income will most probably be taxed both in Portugal as in Sweden.

Whether you are a tax resident in Portugal (NHR or not), or you wish to move to Portugal and your income is sourced in Sweden, we shall be delighted to assist you with the tax treatment of your income and addressing eventual issues arising from double taxation.

Carolina Vieira

Lawyer