Finland-Portugal Tax Treaty Terminated

by Ulrika Lomas, Tax-News.com, Brussels

14 January 2019

The Portuguese Government has confirmed in a notice published in its Official Gazette that Portugal's tax treaty with Finland has been terminated effective January 1, 2019.

Finland's Government issued a notice to terminate the 1970 double tax avoidance treaty with Portugal in June 2018 because it considered the treaty "not consistent with Finland's current tax treaty policy." Specifically, the Finnish Government said that the treaty restricts its "right to tax private pensions received in Portugal from Finland."

"The termination decision ensures that Finland will be able to tax the private pensions of Finns resident in Portugal," a Government statement explained at the time.

Portugal currently grants 10-year tax holidays to foreign pensioners who meet certain criteria – an incentive that has lured retired expats from all over Europe, including from Finland.

A revision to the treaty which was signed in November 2016 would, according to the Finnish Government, have provided Finland with "more opportunities" to tax the income of Finns residing in Portugal. However, the Portuguese Government failed to complete its ratification procedures.

Under Article 30 of the 1970 treaty, the agreement shall cease to apply on or after January 1 of the calendar year following the year in which the termination notice was issued.

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