In addition to general rules on tax exemptions for mergers and demergers, conversions and intra-group transfers, the Norwegian Ministry of Finance can grant consent to make capital gains tax exempt in specific cases within certain limited areas.
The Ministry of Finance has the possibility to grant such exemptions in accordance with section 11-22 of the Norwegian Tax Act. Under that section, the Ministry of Finance can give consent to tax exempt income earned from realisation of real estate, businesses, shares and certain partnership shares, or consent to taxation of such income at lower tax rates. A condition for consent is that the realisation is part of a reorganisation or restructuring of a business with the aim of making it more rational and efficient.
The Ministry of Finance states in the consultation paper that exemptions from the Tax Act's rules on taxation of capital should, to the greatest extent possible, be provided in the form of statutory or regulatory provisions and not as administrative decisions. The Ministry of Finance has furthermore experienced three types of transactions which are often applied for and granted tax exemption by the Ministry. In this regard, the Ministry has proposed to enter the tax exemptions into the tax legislation. It must be expected that the proposal will reduce the workload at the Ministry of Finance. Below, we briefly describe the proposed tax exemption for the three types of transactions.