The Finnish Parliament on Wednesday approved the termination of the tax agreement between Finland and Portugal.
The much-criticised agreement has effectively allowed Finnish pensioners to cash out their private-sector pensions tax free in Portugal, making the country a popular retirement destination for well-off pensioners.
The Parliament’s Finance Committee has previously expressed its unanimous support for the proposal in spite of the fact that terminating such an agreement unilaterally would be somewhat exceptional.
Esko Kiviranta (Centre), the chairperson of the Parliament’s Tax Sub-committee, voiced his hope that the two countries will be able to ratify a new tax agreement by 1 January 2019.
“That way we at least wouldn’t end up in a situation where there’s no tax agreement between Finland and Portugal. This is still possible, if Portugal completes the approval process and notifies Finland of it no later than on 1 December 2018,” he said.
Finland and Portugal signed a new tax agreement in 2016, but the agreement has yet to even be submitted to the Portuguese Parliament.
Kiviranta also pointed out that the question is one of principle rather than money.
“The termination’s impact on pension revenues, which is where the impact would be the most notable, is estimated to be three to six million euros annually based on data from 2016. So it’s not that it’s a question of huge sums of money but rather of principles,” he explained.
The government’s legislative proposal has also been welcomed by opposition parties.
“We must put an end to this grotesqueness, unless of course we reach a solution through negotiations. I think that the memo that has been drafted based on the government’s proposal has been drafted outright excellently,” lauded Jari Myllykoski (Left Alliance).
“Also the Finns Party supports this proposal and is delighted that the government has for a change shown a little backbone when it comes to tax questions,” added Ville Taivio (PS).