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Application of new Finland-Spain tax treaty to begin at start of 2019

Ministry of Finance
Publication date 17.5.2018 14.45
Press release

Under the current tax treaty, pensions paid to residents of Spain are only taxed in Finland in the case of pensions obtained from public service. The new tax treaty will broaden Finland’s right to levy taxes, as it will also allow the taxation of all other pensions paid from Finland to residents of Spain.

There will nevertheless be a three-year transition period for such private sector pensions, during which time the pensions clause in the current tax treaty will continue to apply. Under this clause, pensions are taxed by the country of residence. Where a pension is treated as tax-exempt income in the country of residence, the new tax treaty will apply without the three-year transition period.

Under the new treaty, the country eliminating double taxation of private sector pensions will, by way of exception, be the source country from which the pension income originates. If a person resident in Spain receives a pension from Finland and pays tax on it to Finland, the tax paid in Spain on that pension is deducted from the Finnish tax on that same pension.

Change in taxation of income received from rent or sale of residential apartments

The new tax treaty will also change the taxation of income received from the rent or sale of residential apartments located in Finland. In the future, Finland will tax both rental income and capital gains that persons resident in Spain obtain from residential apartments located in Finland.

Elimination of double taxation: refund instead of exemption

The removal of double taxation is not new, but the way in which this will be implemented is different. If Finland taxes income from abroad, it will deduct, i.e. credit, the tax that the recipient of income has already paid in Spain.

On 30 April 2018, Spain announced that is has approved the Finland-Spain tax treaty. The new tax treaty can come into effect only if it is adopted by both countries’ parliaments and each country notifies the other of the adoption. Finland gave such notification to Spain in April 2016.


Anders Colliander, Ministerial Adviser, tel. +358 2955 30289, anders.colliander(at)