Response to interpellation 2023/24:62 on negotiations with Portugal regarding a new tax treaty
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerned negotiations on a new tax treaty between Sweden and Portugal after the previous agreement was terminated in 2021 1 2. M argues that the government is open to negotiations if the conditions are right 1 and that tax treaties are important for international cooperation and competitiveness 3. M emphasizes that the previous agreement was unreasonable because pensions were not taxed 3. S argues that the agreement was terminated to prevent tax evasion 2 and that a new agreement would facilitate investments and trade 2. S believes that the Finance Minister should use their contacts to quickly initiate negotiations 4 5.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Fredrik Olovsson has asked me partly whether I have taken or intend to take contact with the Portuguese government regarding a new tax agreement, and partly what direction I would like to see for a future tax agreement. The question is posed against the background that Sweden in 2021 terminated its tax agreement with Portugal.
The previous government terminated the tax treaties with Greece and Portugal at one and the same time. Regarding Greece, long-running negotiations are underway for a new agreement. In the case of Portugal, the situation is somewhat different. As Fredrik Olovsson mentions in his interpellation, the countries agreed in 2019 to change the agreement. It primarily concerned changing the rules for the taxation of pensions so that Sweden would have the right to tax pensions paid out from Sweden to persons residing in Portugal. Unlike the Swedish Riksdag, Portugal's parliament did not approve the protocol. In that situation, Sweden terminated the agreement.
The government is open to negotiating a new agreement with Portugal if the conditions are right. I have close and good contacts with my Portuguese colleague.
Fredrik Olovsson (S)
Mr. Speaker! I thank the Minister for Finance for the answer to my interpellation.
Tax treaties may not be something widely known in the population, but they exist between different countries and have the purpose of avoiding or mitigating the effect of international double taxation - when two tax systems clash with each other, quite simply - and thus, naturally, also preventing international tax evasion. They can also be a way to encourage and simplify investments between the states that enter into the agreements.
Historically, we in Sweden have been successful in this area. We have an extensive and very competitive network of tax treaties. It has been good for Swedish citizens and perhaps above all for Swedish companies that want to invest and be active all around the world.
When it comes to Portugal, we therefore had an agreement that was terminated by the Riksdag in unanimity some years ago. The reason was that Portugal had introduced rules that meant that pensions accumulated in other countries, such as Sweden, could simply be withdrawn with no or very low tax in Portugal. The change of the Portuguese rules had, in combination with the agreement that had existed previously, completely unreasonable effects. Quite wealthy people could avoid tax in an entirely unfair way.
Therefore, it was obvious for the previous government to put pressure on Portugal and safeguard Swedish tax revenues. We also reached an agreement with the Portuguese on rules to change this, just as the Finance Minister said, but they were never implemented in Lisbon. Therefore, a unanimous Riksdag chose to terminate the agreement.
Sweden was not alone in doing this either, Mr. Speaker. For example, Finland also did so for the same reasons.
Now Portugal is changing its internal rules at the turn of the year. Whether it is a consequence of the pressure that has increased because Sweden, Finland and other countries have terminated their agreements, or if it is rather due to an internal Portuguese opinion against wealthy people being given completely different conditions to acquire a residence, remains to be seen. It might also not be so important in this debate. In any case, a completely new situation is now being created. With new rules, there is also the possibility of reaching an agreement on a new deal.
I will honestly tell the Minister of Finance that I have only received an oral briefing on this proposal from my party colleagues in the Portuguese parliament. I imagine, however, that the Minister of Finance, who has somewhat different resources, has had the Ministry of Finance delve deeper into the details.
Since the Minister for Finance concluded her response with the statement that the government is open to negotiating a new agreement with Portugal if the conditions are right, and also stated that she has close and good relations with her Portuguese Finance Minister colleague, I have two questions: Do the conditions now exist to initiate the negotiations? And has Elisabeth Svantesson used or does she intend to use her good relation with Fernando Medina to discuss a new agreement between Sweden and Portugal?
Such an agreement would facilitate investment and trade between our countries. It is therefore an issue that is well worth the Finance Minister's time and effort.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! Thank you, Fredrik Olovsson, not only for the question; you also point out that it is well worth my effort to discuss the issues here in the chamber but also moving forward with the Portuguese government.
I just want to emphasize that I completely agree with Fredrik Olovsson's view. That we have tax treaties with different countries is incredibly important. It is important for international cooperation, for competitiveness, for companies, and of course, so that one knows what applies when living in different countries.
There are, of course, certain principles in different agreements when one negotiates. The interpellor is very much aware of this through both their previous and current duties. As the interpellor said, this has been a long series of events. I believe the first agreement with Portugal was signed sometime in the early 2000s. The renegotiations were initiated in 2017 by the previous government and ultimately led to the agreement being terminated.
I think perhaps Fredrik Olovsson should not make it so easy for himself. It sounded like it was the Riksdag that took the initiative. It was a unanimous Riksdag that made the decision, but it was still the Social Democratic government that terminated the agreement in 2021. And we all stood behind that, because of the irregularities from Portugal. So, there we are completely in agreement.
Many are now waiting for an announcement, including Fredrik Olovsson. I will only briefly say that we do not know exactly how the decision in the Portuguese parliament will look. As far as I know, it is not finalized; rather, a proposal has been submitted. When we know how it will look, my intention is that Sweden and Portugal shall have a tax agreement. When that can happen and when the negotiations can resume is too early to say. It depends on what the Portuguese parliament decides.
The priorities that Sweden and I as Finance Minister have are, of course, to take responsibility for our economy and to safeguard the principles that apply to different types of tax treaties. The OECD has clear regulations, both models and frameworks, for this. The previous agreement with Portugal, where the pension was not taxed anywhere, was not reasonable. Regarding what a potential discussion with the Portuguese government will look like and which principles will apply, I have now mentioned the basics. But I do not intend to preempt either the Portuguese parliament's decision or a negotiation.
Fredrik Olovsson (S)
Mr. Speaker and Minister for Finance! It is entirely correct that it was an unreasonable system that was introduced in practice in 2009, when Portugal changed its internal law. When it interacted with tax treaties that we had had previously, the consequences became completely unreasonable. It therefore took over ten years from 2009 before it was finally terminated. It was a long process and not a particularly hasty decision, but it was quite well-founded. Sweden was not alone in doing so either.
It is also obvious to the Portuguese today that it has not been a particularly successful strategy to let wealthy foreigners escape taxes in other countries and then use this to get ahead in various housing queues. One at least has a larger wallet to buy with.
I choose to interpret the Finance Minister positively and that she still has as a starting point and an interest to negotiate with Portugal regarding a new agreement. It is absolutely excellent that Elisabeth Svantesson continues to work hard so that Sweden can have a broad network of tax treaties, not least because they mean that Swedish companies can operate in the world without unnecessarily large risks of being taxed twice or general complications. When one meets, for example, the Swedish Chamber of Commerce in Lisbon, they do point out that since the agreements have been terminated, it has become more complicated and more uncertain to handle these issues.
Working further with Portugal in the near term should therefore be an excellent next step. That one, as the Minister for Finance points out, now has a far-advanced discussion or even negotiation with Greece is good for establishing the broad network. But the economic relationship with Portugal is actually a bit larger than it is with Greece. The exports and imports are simply a bit more extensive. That is why it is important to get started.
My second question in the interpellation concerned what the Minister for Finance has now addressed: what direction one can envision for a future agreement. I also brought with me the point that it is not unreasonable that the OECD's model convention forms the basis for such a discussion. But I would still, despite what the Minister for Finance said, like to ask if there is nothing further to say regarding the more fundamental principles or perhaps a more detailed view of how such an agreement should look going forward. I believe that many are interested in the question.
The Minister for Finance is welcome to add at the end when she intends to contact her Portuguese colleague to really get started with the practical negotiations.
Elisabeth Svantesson often points out that the government's support in the Riksdag gives her a majority and that what the government presents is something that will be implemented. In Portugal, it is a single-party government that has a majority. Then one can assume that what will be decided on will look roughly like the proposal that has been presented. That is at least how I perceive Portuguese political culture. With that in mind, the conditions for the Finance Minister to know what is on the table should be quite significant.
Finansministern Elisabeth Svantesson (M)
Mr. Speaker! I shall be very brief.
I believe that Fredrik Olovsson is one of those sitting in the chamber of the Riksdag - I do not want to diminish others in any way - who knows very well what complications there have been for many years with the agreement between Portugal and Sweden. I will not place all the blame on the previous government but can only state that it has been complicated. Naturally, a large part of this lies with Portugal, because one did not proceed last time. That was also why the previous government chose to terminate the agreement.
I think one should take one thing at a time. I have been clear that, fundamentally, agreements between the countries are needed. It facilitates things for both private individuals and companies, and it is good for the relations between states and states with each other.
Let the decision be made now. I have witnessed stranger things than certain decisions not being made in parliament. I therefore want to see that it is made first. After that, we can return to the question regarding both how an agreement should look and what it should contain. To stand here in a public debate and tell what starting values we have in a negotiation, I believe would be a really bad idea if an agreement is to be able to become good.
With this, I thank you and conclude my contribution in this debate.
Fredrik Olovsson (S)
Mr. Speaker! In conclusion, I still think that the Minister for Finance could have had a slightly more forward-looking attitude in a matter that is so important for many Swedish companies. Taking advantage of the momentum that arises when Portugal changes its own rules still appears to be an opportunity that one should not drag out. Since it has been a complicated issue for a long time, there are reasons to get started as soon as possible. Why not book a meeting for the new year already? It is really just a matter of sending a text message.
Since tax treaties are important for simplifying for companies to act across borders, I look forward to continuing the discussion. If the Minister for Finance cannot soon account for that negotiations have begun, we here in the chamber will continue to discuss both the situation in Portugal and perhaps other tax treaties. These are issues that are well worth raising many times.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.