Unhappy with the tax exemption granted to pensions through the Non-Habitual Resident (RNH) tax regime, Sweden decided to put forward a request to reverse the Convention to Avoid Double Taxation signed with Portugal.
The changes for this review began in 2018, and in May of the following year, a protocol was signed that amends the convention, providing that the Swedes will start taxing their pensioners’ pensions again in 2023 or already in 2022 if Portugal does not take measures to end that tax exemption on pension granted under the RNH.
In 2020, through the State Budget law, residents in Portugal and beneficiaries of the RNH tax program were expected to pay a 10% tax rate on pensions paid by another country.
In this way, residents in Portugal with a pension paid by Sweden who adhered to this 10% rate were able to postpone until 2023 being taxed by Sweden, as long as Portugal ratified the aforementioned protocol – which did not happen.
Faced with Portugal’s non-ratification of the protocol, the Swedish parliament unanimously approved, in early June 2021, a denunciation of the tax treaty it had with Portugal.
On the occasion, in response to Lusa, an official source at the Swedish Ministry of Finance said that the approval of the diploma that annuls the Convention to avoid double taxation between the two countries, “means that the tax agreement will end on December 31” and that, as of January 1, 2022, “Sweden may levy taxes on pensions paid by Sweden to residents of Portugal”.
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