Finland’s Ministry of Finance has announced that it will advise Finnish Parliament to terminate Finland’s 1970 tax treaty with Portugal beginning January 1, 2019, regardless of whether a replacement tax treaty applies before that date or not.
According to the Finish ministry, the existing tax treaty between Finland and Portugal inappropriately restricts Finland’s right to tax certain pensions and income from the rent or sale of residential apartments located in Finland.
While the two countries signed a new tax treaty fixing these problems in 2016, Portugal has yet to submit the new tax treaty to parliament for consideration. Meanwhile, Finland’s parliament and president approved the treaty in December 2016, and Portugal has been officially notified of that fact, Finland’s Ministry of Finance said in a statement published April 13.
“The negotiations over the new treaty took place in a cooperative spirit, and I hope that the agreement can also be adopted by Portugal in time so that we would have a new tax treaty in force when the old treaty is terminated,” said Minister of Finance Petteri Orpo.
For the new Finland-Portugal tax treaty to apply from the beginning of 2019, it must be adopted by Portugal and Portuguese officials must notify Finland of that fact no later than 30 days before the end of the 2018 calendar year. Absent that, domestic law will apply and dealings between Portugal and Finland will be more likely to give rise to instances of double taxation.
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