Sweden's prime minister Magdalena Andersson

Portugal’s Swedish NHR pensioners get the bad news

Swedish pensioners enjoying minimal taxation in Portugal due to the NHR (non-habitual residency) regime heard this week that their perks are over.

The Swedish government has been pressing Portugal for ‘a more realistic approach’ to the taxation of their expat citizens for years (click here), and in the absence of any useful replies, has now opted to return to taxing Swedish pensions at source, irrespective of whether they live in Portugal. 

Swedish expats receiving their pensions from Sweden will thus start paying Swedish taxes on them this year.

In March, Magnus Dhal, representing Swedes in Portugal, wrote to the government to say the change would increase taxation on his countrymen and women’s pensions “to unsupportable levels” (click here).

“If the roughly 8,000 Swedes living in Portugal leave the country, it will reduce the population in many towns of the Algarve and outside Lisbon”, he said – stressing these are (or at least were) citizens with “elevated spending power”, which would mean “consequences for Portuguese businesses”.

But still the government failed to come up with any suitable ‘deal’, and now Sweden has ripped up the ‘fiscal convention’ at issue.

It’s not clear what the reaction of the resident Swedish pensioners’ community is today, but the writing has been on the wall for some time.

Finland was the first Nordic country to break with the terms of NHR for its citizens, again for very much the same reasons : “It’s a fiscal injustice that people who have millions of euros in income don’t pay income tax by moving to Portugal while people with lower incomes in Sweden – and in Portugal – pay their taxes…”, said Sweden’s former finance minister Magdalena Andersson, now the country’s PM.

natasha.donn@algarveresident.com