Response to interpellation 2023/24:833 on a new tax treaty with Portugal
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns the need for a new tax agreement with Portugal after the previous agreement was terminated 1 2. M argues that the government is open to negotiations, but that Portugal must show a willingness to accept Swedish principles, particularly regarding the right to tax Swedish pensions 1 3 4 5. M emphasizes that the previous agreement was unsustainable as it meant that pensions were not taxed at all 3 4. S argues that Portugal has changed its internal rules and that Sweden should take the initiative to contact them to facilitate matters for companies and private individuals 2 6 7. S urges the Minister for Finance to start the process themselves 7.
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)
Madam Speaker! Fredrik Olovsson has asked me if I have conducted or taken the initiative for any analysis regarding the need for and the possibilities of a new tax agreement with Portugal or if I intend to do so. He has also asked if I have made any contacts with the Portuguese government to start negotiations on a new, modern and fair tax agreement or if I intend to do so. Finally, he has asked when one can expect a proposal to the Riksdag regarding a new and fair tax agreement with Portugal.
Fredrik Olovsson returns to this issue, which has its background in that Sweden in 2021 terminated its tax agreement with Portugal. As I mentioned in our previous debate, the government is open to negotiating a new agreement with Portugal. We naturally want a tax agreement with Portugal, but the conditions for a new agreement must be the right ones. It is not enough here that Portugal has abolished the particularly favorable tax rules, which meant that pensions accumulated in Sweden could become completely tax-free after a move to Portugal. Clearer assurances from Portugal were needed.
In the current situation, we do not see that Portugal has shown a willingness to accept an agreement according to these principles.
Fredrik Olovsson (S)
Madam Speaker! I thank the Minister for Finance for the answer.
As indicated by Elisabeth Svantesson, I have interpellated on this issue previously, nine months ago. A lot can happen in both life and society in nine months, so it is still relevant to raise the questions again.
Someone might wonder why one is so persistent as to interpellate the Minister for Finance about precisely tax treaties, but there is reason to remind that these exist for and have as their purpose to avoid, reduce or mitigate the effects of international double taxation and prevent international tax evasion. Another important purpose is, of course, to, by doing this, facilitate and encourage investments and trade between the contracting states.
Sweden has been very active in the area of tax treaties, and we are known for having a comprehensive and competitive network of tax treaties. This facilitates things for both people and for companies. Just before this interpellation debate, I received an email from an entrepreneur here in Sweden who wanted to describe what problems arise in his specific relations with Portugal. It is therefore significant for many.
Just as the Minister for Finance pointed out, we have had a tax agreement with Portugal which we – a unanimous Riksdag – terminated. It was connected to the tax rules that Portugal itself had introduced and which, together with how the agreement looked, implied tax exemption for a certain type of Swedish pensions. We have therefore been in a state without an agreement for three years now.
As I also said in my interpellation, Portugal has changed these rules in its internal law. This was done at the turn of the year, and there should therefore be good opportunities to agree on an agreement that can facilitate both individuals and companies to operate in our two countries.
Regarding my question on whether any contacts have been made with the Portuguese about starting negotiations, I have not received a clear answer, and I therefore ask the question again: Has the Minister for Finance made any contact regarding negotiations or even had conversations about it in any form, or have there been no advances whatsoever from the Swedish side towards Portugal or vice versa in this important issue? This must be the first issue we clarify here.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Thank you, Fredrik Olovsson, for the question! The short answer is no, I have not had personal contacts, but our various departments at the civil servant level have contact with all EU countries in different ways, as Fredrik Olovsson very well knows.
To those who are listening or reading the minutes, I can say something brief about what Fredrik Olovsson was touching upon, about why this is important. Tax treaties are important for our international cooperation. We must safeguard them as far as it is possible; on that, Fredrik Olovsson and I are in complete agreement. We have tax treaties with many countries, and we have them to promote investments and, of course, also to avoid double taxation.
There are certain principles in these agreements, and we follow the principles that exist and that have been developed by the OECD. When it comes to pensions, the model agreement in principle gives the countries that so wish the right to tax occupational pensions upon payment to another country, so-called source taxation. That is the path Sweden has chosen; we want to be able to tax all pensions that are paid out from Sweden. It is a principled issue for our tax treaties, and I perceive that Fredrik Olovsson and I think alike about it.
We have special Swedish principles that we believe need to be protected when we establish agreements. Both when it comes to upholding the agreements and when it concerns negotiating new ones, these principles and starting points are included in the negotiations. It was a principle that the previous government had – actually even when the agreements with Portugal were terminated. It is still good for those who watch or listen to know that it was the Social Democrats who terminated the agreements.
Just a small point, Madam Speaker, on the speech regarding tax agreements: It is nevertheless pleasing for Sweden that we have now succeeded with an Öresund agreement. I would like to have said that. It has been very much in demand, especially in southern Sweden, where many commute to Denmark. Here we finally succeeded, after many years of attempts, in bringing to port an agreement that makes it easier for those who commute between Sweden and Denmark to work remotely. It also means that Denmark will actually increase its compensation to Sweden. The negotiations had been ongoing for a long time, but now we steered the agreement into port.
I return to the tax treaty with Portugal, which has been a recurring issue. Fredrik Olovsson says in the interpellation that there are new circumstances now, but I want to argue that the circumstances are not particularly new. We are, of course, prepared to negotiate with Portugal if they show interest in it. After the Social Democratic government terminated the agreement, interest must also be shown from the Portuguese side.
It is not enough that Portugal has removed the favorable tax rules, one must also accept an agreement that allows us to tax pensions from Sweden. At the moment, that is not the case. But should it be the case that the tax agreement with Finland is ratified, we will have to see how Portugal stands on this. That being said, this is a long follow-up. We do not perceive that Portugal has changed its position, and therefore it is difficult to negotiate a new agreement.
Fredrik Olovsson (S)
Madam Speaker! It was a unanimous Riksdag that stood behind the proposal, and I believe that Elisabeth Svantesson was a Member of Parliament then and also thought it was a good idea to terminate the agreement. It was an agreement that was clearly abused and which fundamentally benefited very wealthy people who wanted to withdraw very large amounts of money more or less untaxed, which was absolutely not the intention.
As the Minister of Finance was in, it is not only we in Sweden who have been upset about it, but other countries have also been – such as Finland. It is possible that the pressure that has been put on Portugal from us and others has had significance for the fact that they are nevertheless changing the internal tax rules which were a large part of the blame for this problem – and, probably, that in a country with great inequality it can be perceived as quite unfair that wealthy foreigners get a preferential treatment.
Regardless of this, it is problematic not to have an agreement. I understand that there have been no contacts between Elisabeth Svantesson and her colleague in Portugal, which in itself is unfortunate. It can, in fact, be difficult to know what the attitude is; it is possible that such a discussion is also taking place in the Portuguese parliament – that some member wonders if the Finance Minister has taken any initiatives and that the Finance Minister says they are open to discussion but have not themselves initiated any contact.
That is how one simply cannot continue, instead, one must find out if there is any possibility to start a negotiation and move forward in this issue. It is about ensuring that we do not get additional years of insecurity, uncertainty, and lack of clarity in our economic relations for both individuals and companies.
When the agreement was terminated and the Committee on Taxation expressed its view and took a position on the issue, it actually concerned, which one sees if one reads the statement, just the problem of how pensions are taxed. That was the decisive factor. Now the Minister for Finance says that additional things need to be in place.
Should I interpret this as that one should simply use the model agreement and that it was not sufficient to go back to that model with an additional protocol that was negotiated - and which Portugal never ratified, which meant that we eventually terminated it? It would not mean that one is exactly on the model, but it would mean that one would resolve just this problem. Is that how I should perceive the Finance Minister's position?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! It is absolutely true that we stood behind that decision; I am simply stating that this agreement was made under the previous government. We also see no major changes in Portugal, and that is why we are not in a negotiation. I was asked by Fredrik Olovsson if I have contacted my colleague regarding this since the last debate, and I have not. Then, of course, I meet the colleague at our various meetings in Brussels.
The whole point, however, is to take responsibility for the Swedish economy, which also involves taking responsibility for tax agreements. It is important for us, and that is why we have updated the Öresund Agreement. But it is still about – and I know that we here are fundamentally in agreement on this – that certain principles must be protected. These are principles that are important for Sweden when we negotiate to what extent we should waive taxing rights, and I perceive that Fredrik Olovsson and I think alike in this.
The previous agreement became unreasonable because Portugal introduced the favorable tax regime. It meant that pensions from Sweden were not taxed either in Sweden or in Portugal, which was, of course, a completely unsustainable situation. A new agreement, which we naturally want to have in place, needs to take into account avoiding a similar situation arising. Sweden must in all cases have the right to tax Swedish pensions.
It is, therefore, clear that the issue is not dead in any way. As soon as we notice that a change has occurred and that there is a will on the part of the Portuguese government to sit at the negotiating table, I am, of course, prepared to do so – I want to work hard so that Sweden can have good tax agreements – but until now, we have seen no indications whatsoever from the Portuguese side that this would be the case.
Fredrik Olovsson (S)
Madam Speaker! I shall conclude with a few demands to the Minister for Finance, and the first must be: Get this process started yourself! One cannot sit in separate chambers and talk about each other; instead, it must be much better to simply talk to each other and agree to start a process that can result in a new, modern, fair, and good tax agreement between Sweden and Portugal.
We are both EU members and should naturally do everything we can to facilitate mobility for both people and companies and facilitate business between Swedish and Portuguese companies. So take an initiative that really makes it possible for us to get a good and well-functioning agreement in place!
It may also take less time for the Minister for Finance specifically if that path forward is chosen, because I will likely repeat this interpellation with, as I believe the previous interpellator said, a fool's persistence until an agreement is in place.
There are, in and of itself, also other countries that it is important that we have agreements with. The Danish agreement is definitely important and perhaps also covers more people than a Portuguese one would, but the strength of these agreements is nevertheless that one has a very fine network which means that Swedes can move around the world and Europe and that Swedish companies can do business with other countries under good conditions.
So the appeal is: Start with a conversation when you meet next time, Finance Minister!
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank the member once again for the question.
Fredrik Olovsson and I have worked together for many years. We have had somewhat different roles. Fredrik Olovsson knows that I do not find it particularly difficult to sit down and talk with people from all parties or from different countries; on the contrary, I often look forward to it. I like people. I also like to move forward when it comes to different types of political problems, and this is a problem.
The agreement was terminated because Portugal did not do what Sweden and Portugal had agreed upon. So far, we have not seen any will from Portugal's side at all.
Does it mean that this issue is dead for a long time to come? No. My view is that we are going to have a tax agreement with Portugal in place; that is reasonable. Portugal must, however, have a basic attitude that is changed compared to before – otherwise, it is a waste of time to sit at that table. Then we can negotiate other things instead.
We do, however, completely agree that the best thing, both for individuals and for companies and their investments, is that Sweden reaches a tax agreement with Portugal.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.