In response to Lusa, an official source from the Swedish tax authority stated that it had identified “about 2,500 people who were subject to limited tax liability in Sweden” because they were under the Convention to avoid double taxation, and that, due to the end of this Convention, they have begun “to be taxed since January 1, 2022”.
The same official source points out that in addition to these approximately 2,500 already identified, there is a group of people, whose number is still unknown, who are now declaring their income for 2021 – the year in which the Convention was still in application – and who may also become eligible to be taxed in Sweden.
The Convention to avoid double taxation between Portugal and Sweden ended on December 31, 2021 and one of the most immediate effects was to return to this country the right to tax Swedish pensioners residing in Portugal whose pensions are paid by private funds.
Before moving towards the end of the Convention, Sweden expressed its intention to review its terms in response to the fact that it disagrees with the tax regime that Portugal assigns to pensions paid by other countries under the Non-Habitual Resident (RNH) regime.
Negotiations for this review began in 2018, and in May of the following year, a protocol amending the Convention was signed. However, in the absence of ratification of the protocol by Portugal, the Swedish parliament unanimously approved, in June 2021, the denunciation of the tax treaty it had with Portugal from December 31 of that year.
New tax situations
The absence of a tax treaty between the two countries affected, according to the tax expert and co-founder of the consultancy Ilya, Swedes who came to Portugal in two situations. Thus, he says, pensioners, who paid 0% tax in Sweden, now pay 25%. In Portugal, they will be able to pay the 10% fee (if they have registered with the RNH after 2020 or have opted for this new regime), which can be deducted.
The second situation, says the same tax expert, involves investors with dividends, interest and royalties from Sweden. In the absence of the Convention, their taxation at source (ie in Sweden) is no longer limited to the conventional rates of 15%, 10% or 5%, respectively, but domestic rates apply.