Finland shredded its tax agreement with Portugal in June.
If Portugal does not accept a draft deal letting Finland tax most pensions drawn by its retirees there by November, it will start doing so anyway in January.
It estimates that it loses a mere 3m-6m euros a year in revenue to Portugal, but says that as a matter of principle it can no longer tolerate "tax refugees".
This is just sour grapes, says Pekka Pystynen, a retired former executive.
Mr Pystynen spends his winters in his home in the Algarve and the summers at his cottage in Finland.
The tax benefits were a bonus, he says, but the main draws were the weather and relaxed lifestyle.
Pensioners are important to Portugal's tourism industry, which contributed over 17% to the country's GDP in 2017. One job in five is linked to tourism.
The average pension paid to Finns living in Portugal is around 3,500 euros a month. Since prices are a fifth lower than the euro-area average, that goes a long way.
According to Sirpa Uimonen of the University of Helsinki, Finns living in the Algarve spend 14,700 euros a year on average, over 20% more than locals do.
Withdrawing from double-taxation agreements is rare. Denmark ended its deals with Spain and France in 2009, also because of rows about pensions.
In the case of Portugal, other countries may follow Finland's lead. Sweden's finance minister has pressed to do so.
More commonly, countries take matters into their own hands. France is about to start taxing French pensions that are paid abroad.
And a new bilateral agreement means that Britain will soon start taxing British government-service pensions drawn in Cyprus.
Portugal's generosity to retired foreigners has been criticised by locals. They pay up to 48% on their pensions; property prices rose by 10% last year.
Extra demand from foreign buyers will not have helped. One political party, the Left Bloc, has proposed closing the pensions loophole.
Retired foreigners may soon have to decide whether vinho verde and pasteis de nata are enough of a draw.