SWEDEN - Amended tax agreement with Portugal

May 2019

On 16 May 2019, Sweden signed a protocol with Portugal amending the tax agreement between the countries.

The main news in the double tax treaty between Sweden and Portugal are:

A tax evasion clause whereby benefits in the double tax treaty (reduction of tax or exemption) will not be granted for transactions or arrangements made by taxable persons where a principal purpose of making the transaction has been to obtain tax benefits of the tax treaty.
An amendment to the provisions of the treaty on the taxation of capital gains whereby Sweden may in certain cases be extended the right to tax on capital gains arising directly or indirectly from the sale of real estate companies.
An amendment to the provisions of the tax treaty on the taxation of pensions, implies that Sweden is given the right to taxation on all pensions derived from Sweden, including occupational pension from previous private employments.

The new provisions enter into force at various stages starting on 1 January 2020, if they are approved by the Swedish parliament.

The benefits from the double tax treaty between Sweden and Portugal combined with the non-habitual residence status has been part of the exit plan for many individuals in Sweden with large pension holding. The beneficiary situation will be a setback in the tax planning for expatriate who are considering an exit.

Lena Gewers
lena.gewers@bdo.se