Sweden’s tax treaties with Portugal and Greece abolished – what impact will this have on your tax situation? 

The Swedish Parliament decided, on 2 June 2021, to terminate the tax treaties in force between Sweden and Greece/Portugal. In accordance with the provisions of the treaties, both treaties are now no longer in force, since 1 January 2022.  

The reason for Sweden terminating the treaties, is that both Portugal and Greece have taxed pension plans with source in Sweden very low, or not at all. For Swedish non-tax residents  that were previously covered by one of the treaties, with treaty residency in either Portugal or Greece, Swedish so-called SINK-tax of 25 % will now be levied on their pensions with source in Sweden.  

By the reason of this, said pensions will likely be subject to tax both in Sweden and Portugal/Greece. To avoid the income from being double taxed, an internal credit/exempt rule in one of the countries should be applied.  

Furthermore, consequences can rise in relation to the taxation of capital gains and/or dividends, for individuals that the provisions of the treaties were applied on. For previous Swedish residents, that now resides in Portugal or Greece, the Swedish 10-year rule will now be fully applicable. This implies that Sweden retains the right to tax certain capital gains during 10 years after the individual’s relocation from Sweden and tax dividends at regular tax rates. 

Businesses with presence in Sweden and Greece/Portugal also risk the arise of a permanent establishment, in accordance with the internal legislation of the state, since the provisions on permanent establishment in the treaty are no longer applicable.  

Skeppsbron Skatt has extensive experience of international taxation of both individuals and businesses. Skeppsbron Skatt is part of the independent network of tax consultants, Taxand, with partner firms in both Portugal and Greece, together with many other countries globally.   

Do not hesitate to reach out to us, in case you or your company are affected by the terminated treaties.  

Felix Schöttle
Global Mobility Services
Pernilla van der Capellen
Partner, Global Mobility Services
Anders Lagerholm
Partner, Global Mobility Services