Proposal to significantly restrict the Norwegian tax amnesty scheme

Under the current rules on voluntary disclosure, taxpayers may correct or complete unreported or incompletely reported income and/or wealth to the Norwegian Tax Administration without being subject to additional tax. Furthermore, the Tax Administration will not report such matters to the police.

The purpose of tax amnesty is to encourage taxpayers to correct errors in previous tax returns and provide complete and correct information to the Tax Administration that would otherwise remain undisclosed. The voluntary disclosure process applies both to those who have knowingly evaded taxes as well as those who have unknowingly reported incorrectly.

In recent years, the Norwegian Tax Administration has experienced a significant increase in enquiries regarding voluntary disclosure. Previously, tax amnesty was mainly used by individuals with substantial wealth in countries with limited information exchange with Norway. However, this has changed in recent years. The Tax Administration now has much better insight into taxpayers’ financial situation, partly due to information exchange agreements and third-party reporting. Consequently, the Ministry of Finance are of the opinion that the current lenient rules on voluntary disclosure are no longer necessary. 

The Ministry proposes replacing the current voluntary disclosure rules with an exemption from surcharges for taxpayers who self-correct prior tax assessments (Nw. egenretting). This would limit the ability to correct errors without additional tax to the last three income years, reducing the current ten-year window.

According to the proposal, the exemption from additional tax will only apply if the conditions for additional tax are not met. Hence, tax amnesty will no longer be available for deliberate and grossly negligent breaches of the duty of disclosure. If the proposal is adopted, it will no longer be possible to obtain tax amnesty for severe cases of tax evasion. In such cases, voluntarily addressing past errors will offer no advantages.

As a result, taxpayers considering voluntary disclosure in the future will need to carefully weigh the benefits and disadvantages of such reporting. Correcting errors from the last three income years under the new rules could prompt the tax authorities to reassess earlier years, potentially imposing additional tax for the taxpayer. The Tax Administration may also interpret the situation as a grossly negligent breach of the duty of disclosure, allowing for re-assessment and additional tax for up to ten income years. In such cases, the proposal may have unintended consequences for taxpayers without access to competent tax advisors.

The effective date of the new rules will be set following the consultation period, which ends on 9 January 2025. Requests for voluntary disclosure submitted before the effective date will be processed under the current rules on voluntary disclosure. Taxpayers considering voluntary disclosure are therefore advised to act promptly – if voluntary disclosure is relevant, it should be evaluated and executed without delay.