Swedish retirees are flocking to Portugal to avoid taxes – but they could soon end up like their Danish and Finnish peers
In recent years, Portugal has become a popular low-tax haven for Swedish retirees. Since 2009, almost 2300 Swedes, most of them senior citizens, have swapped dark winters for the Mediterranean sun, and moved to Portugal either part- or full-time. Doing so, they have been able to avoid paying taxes to Sweden, while paying zero taxes on their pension income in Portugal for up to ten years.
This “Mediterranean loophole” has provoked resentment in a country that prides itself on fair play and equality. The social democrat finance minister Magdalena Andersson – who has pushed for a change in Portugese tax laws with her counterpart Mario Canteno – mirrored the public sentiment earlier this year by saying that people who are moving to Portugal for tax reasons “should look themselves in the mirror.” Now there may be a change to the taxation rules – from the Portugese government.
According to Portugese daily Jornal de Negócio, the country’s social democrat government considers introducing a tax on foreign people living in the country. This news was reported by Dagens Industr (Di).
“It’s still just a discussion, but it’s interesting that [the taxation issue] a topic of discussion in the budget,” said Johan Sander, tax advisor at Deloitte, to Di. He adds that it’s difficult to estimate how likely it is that the proposal goes through.
The move may intend to alleviate mounting criticism towards the Portugese system, which was designed amidst the financial crisis in part to attract native Portugese retirees back to the country and boost the economy.
The zero-tax policy has caused controversy in the other Nordic countries as well. Last year, Finnish finance minister Petteri Orpo struck a deal with the Portugese finance minister (Mario Centano), which lets Finland tax retirees even if they live in Portugal. Denmark has had a similar agreement with Portugal for even longer.
