Rich Finnish Pensioners Flock to Portuguese Paradise to Enjoy Tax Breaks

Since the advent of the EU, moving to another country to enjoy more advantageous tax rates has become quite common. In Finland, it has become the done thing for the well-to-do to move to Portugal after retirement.

Finnish pensioners living in Portugal, where tax rules are much more favorable compared with those of Nordic countries, enjoy the highest relative income of retirees living in different countries across the globe and receiving Finnish pensions, the Finnish newspaper Kauppalehti reported.

Some 500 Finnish retirees living in Portugal receive an average pension of 3,493 euros each month, which is more than the average income for working people in Finland, which it 2015 amounted to 2,963 euros.

All in all, 4 percent (around 60,000 people) of all Finnish pensioners live outside Finland, according to the Finnish Center for Pensions. The average monthly payment is 401 euros. Remarkably, 67 perscent of all foreign-based Finnish pensioners live in neighboring Sweden, enjoying a modest 201 euros a month.

Finnish pensions are calculated on the basis of earnings and compulsory contributions over the length of an individual's career. The higher one's salary is, the more he or she receives after retirement.

Interestingly, Portugal has attracted the most high-income seniors from Finland. The sunny republic on the Iberian Peninsula has become a new home for a cohort of wealthy Finns, including former Kesko president Matti Halmesmäki, Sakari Tamminen and Kim Gran, who both held senior positions in Nokian Tires, as well as billionaire Maarit Toivanen-Kuivisto, the owner of the construction concern Onvest.

The Finnish Finance Ministry has been trying to stop the tax haven and force its citizen to pay up. In 2016, Finance Minister Petteri Orpo signed a package of agreements with tax authorities in Portugal and Spain after protracted negotiations.

The agreement extended Finland's right to tax both the state and private pensions of Finns living in Portugal after it became obvious that a number of Finnish high-earners have moved to Portugal for tax breaks.

Finland's Finance Minister Petteri Orpo said that although no exceptionally big sums were involved, this measure was important to reinstate justice and trust in the Finnish tax system. However, he also admitted that Portugal probably would continue to attract Finnish pensioners.

In 2016, the monthly pension for those living in Finland totaled 1,405 euros. The same year, Finnish state pensions totaled 29.7 billion euros, which amounted to 13.5 percent of Finland's GDP.