Norway is introducing sterner rules for “tax refugees” amid reports that more of the country’s well-to-do have already moved abroad or are considering doing so.
The ruling center-left coalition led by the Labor Party agreed to abolish a five-year time limit on exit tax on unrealized gains on shares and other assets. Furthermore, the rules are extended to apply to the transfer of shares to close family members living abroad, with immediate effect.
The parties also agreed to task the government with looking into changes to ensure that “unrealized gains accrued in Norway up to the time of expatriation” are actually taxed in the country.
While the left-wing coalition has been elevating the tax burden on the country’s richest, there has been growing evidence of most well-off Norwegians taking steps to avoid it. Among others, The country’s law firms have experienced an increase in requests for immigration advice from wealthy people, calling the number of “billionaires” (that is those whose net worth exceeds NOK 1 billion or $100 million) seeking to relocate “alarming”. Switzerland has been named as one of the most popular tax refuges for high net worth Norwegians.
Since the 2021 tax changes, a plethora of Norwegian luminaries, including Olympic and world champion and cross-country skiing legend Bjorn Daehlie and billionaire Kjell Inge Rokke, one of the country’s richest at $5 billion, moved abroad.
Scandinavia in general is known for its high taxes, that are spent meeting societal needs and providing welfare. Norway in particular has a progressive tax on gross salary and other personal income, commonly known as the bracket tax, which is paid after the income tax. Furthermore, the oil-rich Nordic nation is among the few in Europe to have a wealth tax, which includes bank deposits, shares, cars, and property and is calculated based on one’s net wealth. The Socialist Left, the junior partner of the coalition, has sought to raise the wealth tax further.
Since Norwegian residents already experience one of the highest tax burdens on the planet, with the top individual income tax bracket at a staggering 47.8 percent, raising taxes in the hope of preventing compatriots from fleeing seems like fighting fire with fire.
To indicate the extent of the problem, those leaving Norway to avoid the exorbitant taxes were slammed by none other than Prime Minister Jonas Gahr Store, himself the owner of a large taxable fortune he largely inherited. Among other things, he called the recent exodus a “violation of the Norwegian social contract” that makes it possible to build large fortunes.