EXIT TAX REFORM: WHAT TO EXPECT FROM THE 2027 BUDGET AND BEYOND

The Tax Commission, appointed in December 2025 with members nominated by all parties in the Norwegian Parliament except the Progress Party, delivered its report (NOU 2026: 9) on 24 June 2026. The Commission agrees that gains accrued while a person is resident in Norway should be taxed here, but stresses that this must be balanced against the taxpayer's mobility and liquidity. It unanimously recommends three relief measures, one of which is put forward for further consideration, and it asks the Ministry of Finance to examine a fourth issue. The Commission is divided on the most contentious element, the 12-year rule.

First, the dividend instalment rule: under the current rules, 70% of any distribution received must be applied towards the exit tax liability, which in practice may leave the shareholder with little or nothing once Norwegian and foreign taxes have been paid. The Commission unanimously recommends reducing this rate to 37.84% (the effective tax rate on share income) and allowing a deduction for Norwegian withholding tax paid on the distribution. This would put emigrants on a more equal footing with shareholders resident in Norway.

Second, temporary residents: foreign employees and specialists who spend only a limited period in Norway currently risk an exit tax charge when they leave. The Commission unanimously recommends an exemption for individuals who have been resident in Norway for no more than seven of the last ten years, in line with the Danish rules (Germany has a similar exemption for persons resident for up to seven of the last twelve years). The measure is regarded as particularly important for attracting highly skilled labour, as the current rules may deter relocation to Norway.

Third, post-emigration losses: under the current rules, no deduction is available if the shares fall in value after emigration. The Commission unanimously recommends that consideration be given to a deduction for genuine declines in value realised within three years of emigration. Declines resulting from transactions that are not in the company's interest, including transactions with related parties, would be excluded, and the deduction would be conditional on the taxpayer documenting that the conditions are met.

On the 12-year rule, a majority of the Commission (all but three members) favours retaining the requirement that the exit tax be paid within 12 years, provided this is compatible with EEA law (the current rules are under review by the EFTA Surveillance Authority (ESA)). The minority would abolish the rule, so that the tax falls due only when the shares are actually realised. In the minority's view, the combination of wealth tax and strict exit tax rules leads many founders to consider leaving Norway before they have even started their business.

Finally, incoming taxpayers: for exit tax purposes, the acquisition cost of shares held by persons who have moved to Norway is already set at market value on the date of arrival. On an ordinary realisation in Norway, however, historical cost applies, so that gains accrued before the owner became resident are taxed here. The Commission recommends that the Ministry of Finance examine whether market value on arrival should apply generally, to all assets brought within the Norwegian tax jurisdiction. Such a change would make Norway more attractive to foreign talent who already hold shares with latent gains.

It is worth noting that the Commission's report is a set of recommendations, not a legislative proposal. The Commission was asked to recommend reforms capable of commanding a broad majority in the Parliament over time, and its report is intended as the starting point for a broad cross-party tax settlement (No: “skatteforlik”), in the tradition of the settlements of 1992, 2006 and 2016. The public consultation on the report closed on 24 September 2026. The Minister of Finance has announced that the government will present a white paper on tax reform in January 2027, which is to serve as its invitation to the parties in the Parliament to negotiate a settlement. The Minister has himself acknowledged that reaching agreement will be difficult, not least on wealth tax. Only once the negotiations are concluded can the agreed changes be implemented through legislative proposals.

This sequencing matters for the 2027 budget. The government could in principle take up individual recommendations in the budget, the Minister of Finance has said that the government will continue to improve the tax system both within and alongside the work towards a settlement. However, the exit tax proposals form part of the overall package to be negotiated, and there may be little appetite for adopting them ahead of the white paper. The budget itself must also be negotiated in the Parliament, since the minority Labour government depends on the Centre Party, the Socialist Left Party, the Red Party and the Greens to secure a majority.

Beyond the statutory reforms, there is a strong case for addressing the administrative side of the exit tax regime. Individuals who have completed the three-year emigration process currently wait roughly eighteen months for the Tax Administration to confirm their status, leaving fundamental questions about wealth tax liability, property purchases and the treatment of dividends unresolved in the meantime. The Tax Administration promptly confirms emigration for pensioners taxed under the source tax scheme, yet declines to do so for other emigrants, even though the legal test is the same.

This inconsistency has become more pressing following the Tax Appeal Board's (No: “Skatteklagenemnda”) decision of November 2024, which held that a taxpayer must be resident in Norway on 1 January of the assessment year to be liable to wealth tax on worldwide assets – so that a person whose emigration takes effect from 1 January is not liable for the preceding year. This outcome has since been reversed by statute from 2026, but the decision arguably remains applicable for the 2025 income year, making the precise date of emigration decisive. A binding advance ruling or an early confirmation mechanism, similar to what pensioners already receive, would provide the predictability that both the government and the Tax Commission say they wish to promote.

In light of the process outlined above, we consider it unlikely that the government will propose significant changes to the exit tax rules in the 2027 budget. The more likely scenario is that the exit tax will be dealt with as part of the negotiations on a broad tax settlement following the white paper in January 2027, with any legislative amendments to follow.

In our view, however, there is no need to wait. The reduced dividend instalment rate and the exemption for temporary residents were endorsed unanimously by a commission whose members were nominated by all parties in the Norwegian Parliament except the Progress Party, and neither depends on the more contentious trade-offs (notably on wealth tax) that the settlement negotiations will have to resolve. Nor are they costly: the Commission estimates that the lower instalment rate will have no revenue effect, since the tax must still be paid within 12 years, that the exemption for temporary residents will reduce revenue only to a limited extent, and that the administrative consequences will be limited. In the meantime, the current rules continue to have real costs: emigrants may be left with little or nothing of their dividends, and the prospect of exit tax discourages highly skilled workers from relocating to Norway. The Minister of Finance has himself said that the government will continue to improve the tax system alongside the work towards a settlement. We therefore believe these two changes should be proposed in the 2027 budget or, at the latest, in the revised national budget in spring 2027, rather than held back pending the outcome of what may prove to be lengthy negotiations.

Beyond these two measures, the outlook is more mixed. The deduction for post-emigration losses could also be adopted, although its conditions may be tightened. The proposal to set the acquisition cost of incoming taxpayers' shares at market value is less certain, still the Commission has only recommended that the Ministry “examine” the issue, and since the change would apply to all assets brought into Norway, it may well be deferred further. The 12-year rule remains the most contentious point: we expect it to be retained, subject to EEA compatibility, although political pressure from the start-up and technology sector continues to build.

On the administrative side, the current waiting period for confirmation of emigration is increasingly difficult to justify and risks undermining confidence in the system. Since the Tax Administration already provides prompt confirmation for pensioners, extending the same practice to other emigrants should not require legislative amendment, and could (in our view should) be done now through an administrative instruction to the Tax Administration, pending any formal binding-ruling mechanism. Given the broader uncertainty surrounding exit tax reform, however, we fear that administrative improvements will be deferred as well.