SHARE
COPY LINK
For members

POLITICS

What changes could Norway’s new government make to taxes? 

A new Norwegian government is on its way, but will it mean a higher or lower tax bill for residents?

What changes could Norway's new government make to taxes? 
Labour leader Jonas Gahr Støre is currently negotiating with the leaders of the Socialist Left Party and Centre Party. Photo by Arbeiderpartiet on Flickr

Victorious opposition parties are in the process of thrashing out the early details of Norway’s next coalition government. 

During these negotiations, the parties will have to compromise and broker deals and agreements to secure the coalition that works best for them.

But how will all this affect your tax bill over the next five years? 

The three parties currently expected to form a coalition all made pre-election promises to cut taxes for those on low and middle incomes. Labour, the Centre Party and the Socialist Left Party are the most likely coalition outcome at the time of writing.

Each of the parties has slightly different visions for achieving promised tax cuts. Generally though, they are all pulling in the same direction, so it will be relatively easy to implement the changes to tax without the need for drawn-out negotiations.

Residents of Norway pay an income tax of 22 percent, in addition to a bracket tax that is calculated based on your income. For example, those who earn between 260,100-651,250 kroner per year will pay a bracket tax of four percent. The bracket tax can be as high as 16.2 percent for high earners. You can read more about tax brackets in Norway here

Labour wants to cut income tax for everybody with a yearly salary of less than 750,000 kroner per year and increase it for those on higher wages. Labour says these cuts would mean more money in the pockets for 80 percent of Norway’s workforce. 

Analysis: How the 2021 general election result could change Norway

The Centre Party wants to cut income taxes for those earning low to middling salaries. In addition, the party also intends to rejig Norway’s flat tax rate, which it believes hits families on low incomes the hardest. 

Then, finally, there’s the Socialist Left Party which, much like the parties it could join in government, has said it would cut taxes for those on lower incomes and raise taxes for people taking home the biggest paychecks.

However, as we’re sure you are all aware, income tax isn’t the only taxation around, so what are the party’s policies regarding other levies? 

Labour Party 

Pensioners are also set to shave money off their tax bills to the tune of around 2,500 kroner per year. In addition, the party says it would keep corporation tax at 22 percent and increase Norway’s controversial working capital, or wealth tax. 

The wealth tax is levied against a person’s assets, with heavy discounts on a person’s main point of residence, for example. You can read more about Norway’s wealth tax here

Furthermore, Labour will not reintroduce inheritance tax. 

In terms of taxes to protect the environment, the Labour party has pledged to increase CO2 taxes until 2030 gradually. However, the party states motorists will be protected against climate levies.

READ ALSO: What the election win for Norway’s left wing coalition could mean for foreign residents

Centre Party 

Like Labour, the Centre Party supports maintaining the wealth tax. However, the Centre Party is against a national property tax. Municipalities currently decide whether to implement the charge. 

The party also wants lower taxes for businesses in rural areas and sectors such as tourism, transport and culture. 

For people who get involved in their local communities, the Centre Party has proposed tax deductions for those who fund grassroots organisations. 

Norwegian election: What foreign residents should know about the Centre Party’s election promises

Socialist Left Party 

The Socialist Left Party’s other tax policies are probably the ones most at odds with their potential coalition partners. 

Inheritance tax, which the other parties are opposed to reintroducing, could be brought back into the fold if the party has its wishes granted. Further, the party wants to increase wealth tax and slash the discount for shares and equity when calculating that charge. 

It also back a hike on climate taxes with deductibles in place for those on lower incomes. 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

TAXES

Who will be affected by Norway’s new exit tax and how will it work?

Norway's government is moving forward with plans to enact stricter tax regulations for people leaving the country. The Local contacted the Ministry of Finance to find out the details.

Who will be affected by Norway's new exit tax and how will it work?

A new exit tax is in the works, the Norwegian government announced recently. 

READ MORE: What we know so far about Norway’s plans for an exit tax

The proposed changes aim to close loopholes within the existing tax system, particularly concerning the taxation of gains made on shares while residing in Norway and moving assets abroad.

Under the proposed regulations, those who have left Norway after March 20th, 2024, would be subject to taxes on gains of more than 500,000 kroner that they have accrued while in Norway. 

This move comes as part of the government’s efforts to address a recent outflow of wealth from the country, with Switzerland being a popular destination for tax exiles from Norway.

READ MORE: Why Norway has continued to see an exodus of wealthy residents

Who would be affected – and how would it work?

The new tax would affect both foreigners and locals – as long as they’re tax resident in the country, State Secretary Erlend Grimstad at the Ministry of Finance told The Local.

“The Norwegian exit tax rules, both the current ones and the ones being proposed, would affect natural persons who are tax residents in Norway,” he said.

The tax settlement process upon departure from Norway would require people to address their tax obligations related to gains exceeding 500,000 kroner on shares acquired during their time in Norway.

Emigrants would have several options for fulfilling this tax obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest.

“Exit tax on shares will be imposed on individuals who terminate their tax residence in Norway, either according to Norwegian tax law or the applicable tax treaty.

“The rules also apply when an owner resident in Norway transfers shares as a gift to a person resident outside Norway,” Grimstad said, further noting that the new rules would only apply if the deemed net gain at the time of departure or transfer exceeded 500,000 kroner.

When could the new rules enter into force?

The consultation period for the new exit tax proposal began on March 20th and will last until May 21st, 2024. Thus, stakeholders and the public will have the opportunity to provide feedback and insights for the next two months.

Following this period, the proposal will undergo review and potential adoption by the Norwegian parliament (Storting), with the government needing majority support for implementation.

READ MORE: Does Norway really have some of the highest taxes in the world?

However, if the rules are passed, they will apply from March 20th, 2024, Grimstad told The Local.

“This is necessary to counteract tax adaptations in the time between publication of the proposal and adoption of the changes in the Storting,” he said.

The reasoning behind the new exit tax

Commenting on the exit tax developments last week, Norwegian Finance Minister Trygve Slagsvold Vedum said that it was important to uphold the principle of fairness in the taxation process, noting that people should contribute taxes on assets accumulated in Norway.

However, the proposed regulations also include provisions for those intending to return to Norway within the 12-year timeframe, ensuring that their tax liability would be adjusted accordingly.

“When you relocate, it’s only fair that you contribute taxes on what you’ve earned or gained in Norway. However, this process must be reasonable, hence the 12-year rule. Some people may wish to reside abroad temporarily and eventually return home,” Vedum said at the time, according to the Norwegian Broadcasting Corporation (NRK).

The proposed exit tax would extend beyond shares to include gains from share savings accounts and fund accounts. Additionally, transfers of shares with subsequent gains to people residing abroad, such as relatives, would trigger the tax if gains exceed 100,000 kroner, a reduction from the previous threshold of 500,000 kroner.

SHOW COMMENTS