The 2016 agreement has not yet arrived in the Portuguese Parliament, according to the Finnish Finance Ministry. The Finnish law will be enforced if there isn't a replacement for the old treaty.
Finland is planning to terminate the tax agreement signed with Portugal in 1970. This agreement, among other things, restricts Finland’s right to tax some pensions received there.
In a press release, the Finnish Finance Ministry explains that the 1970 treaty to avoid double taxation is still in place, but highlights that another deal was signed in 2016, which should start being enforced in 2019. However, Portugal hasn’t handed in to Parliament yet. The agreement must be accepted by both countries to be implemented, and one needs to notify the other. This notification must arrive 30 days before the end of 2018, the press release underlines.
The treaty currently enforced restricts Finland’s right to tax certain pensions paid by the country and income received from renting or selling residential apartments located in Finland, the press release states. According to the Finnish Finance minister, Petteri Orpo, “the tax treaty between Finland and Portugal that is still in force is inconsistent with the notion of fairness regarding taxation of pensions”, so the Government is asking for the deal to end as of 2019. The minister also recalls that the negotiations for a new treaty are based on “a cooperative spirit”, and says he hopes “the agreement can also be adopted by Portugal in time”.
The termination of the treaty should take place by the end of June, considering the goal is to implement it in 2019. The Finnish legislation will apply if Portugal does not adopt the new treaty: the same is to say that Finland will no longer have restrictions in enforcing tax legislation.
According to the agency Xinhua, quoting the Government advisor Antero Toivainen in statements to the newspaper Helsingin Sanomat, Finland had never turned its back on a tax agreement with any other country.