Finland’s Finance Ministry announced Saturday that it had received a letter from its Portuguese counterpart confirming its willingness to lift an existing tax holiday for Finnish pensioners.
The deal means that Finnish retirees living in Portugal will in future have to pay income taxes on their private sector pensions.
Finance Minister Alexander Stubb said that the breakthrough represented the fruit of many years of negotiations. The talks finally reached the ministerial level last August, he noted.
"This spring, we were even prepared for the termination of the present agreement. I am very satisfied that this work has yielded a successful outcome and that a new agreement will arise," Stubb said in a statement.
The terms of the current tax treaty prevents Finland from collecting taxes on private sector pensions paid to Finnish nationals resident in Portugal, because of a ten-year tax holiday Portugal grants to foreign retirees.
Similar deal signed with Spain
The details of the new taxation agreement will be made public once both sides have signed on the dotted line. The Finnish Finance Ministry said it aims to seal the deal as quickly as possible.
Late last year Finland was able to negotiate a similar agreement with Spain.
Portugal’s generous taxation regime has recently been frequently referenced in Finnish news media, following reports that several influential figures in business and politics have relocated to take advantage of the tax holiday.
The so-called tax refugees include former chief executive of Nokian Tyres Kim Gran, ex-CEO Matti Halmesmäki of the Finnish food and general retail group Kesko, and former CEO Sakari Tamminen of the metals company Rautaruukki.