Schjødt submits consultation comment on the Norwegian Government`s proposal to tighten the exit tax rules


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The Norwegian Government on 20 March 2024 proposed a bill to tighten the exit tax rules on shares and certain other assets for individuals moving from Norway. Schjødt recently published a newsletter on the proposal to tighten the exit tax rules. That newsletter can be found here.

The proposal is broad in scope and affects several groups of people. The most significant changes entail that:

  1. exit tax must be paid no later than 12 years after emigration regardless of whether shares and certain other assets have been realized and regardless of whether the value of the shares or certain other assets have decreased, and 
  2. that exit tax will be immediately payable upon the demise of the emigrated taxpayer. 

If the Government's proposal is adopted, the changes will take effect from 20 March 2024.

The proposal has elicited strong reactions and numerous parties have submitted remarks as part of the consultation round ending on 21 May 2024. At Schjødt we share the concerns expressed by the Norwegian business community, and have therefore submitted our own comments on the proposal, highlighting several problematic consequences of the proposed changes. The proposal can be found here, and Schjødt's consultation comment is available here.

In summary, Schjødt is particularly critical to the following points in the proprosal:

  • The proposal will affect all groups looking to take permanent or temporary residence outside Norway regardless of their motive for moving, as long as they have latent gains on relevant assets exceeding NOK 500,000. For such persons, latent gains on shares and other relevant assets are taxable on their assumed fair market value at the date of exit, and the exit tax must be paid within 12 years (unless the individual moves back to Norway within 12 years). 

    The absolute requirement of payment of the exit tax regardless of realization (and regardless of whether the value is decreased or even evaporated) is not only unreasonable, but likely constitutes a violation of the EEA-agreement regarding the free movement of persons and the right of establishment, for those individuals moving to an EU/EEA state. This is substantiated by a recent ruling from the German Federal Fiscal Court, which concluded that taxing unrealized capital gains upon emigration from Germany to Switzerland would violate the agreement on free movement of persons and the right of establishment. The Norwegian Ministry of Finance has not addressed the recent ruling in their proposed bill.


  • The proposal does not address the core issue of Norwegian tax residents emigrating from Norway. Recent developments in the Norwegian tax regime for business ownerships have created an unfavorable investment climate for Norwegian investors and business owners. This situation has been politically created through the Government's increased wealth and dividend taxation without sufficient consideration towards the business sector's need for predictable and stable regulatory conditions. The result of the increased taxation is emigration by high net individuals, partly to alleviate the pressure on owners to extract dividends from companies in order to be able to pay their wealth tax.


  • As the proposal currently stands, it will make it difficult for Norwegian businesses to attract skilled labor from abroad. To compete with foreign employers, Norwegian employers may have to offer share options or share acquisitions as a part of the remuneration package. Foreign workers moving to Norway may own shares in companies or mutual funds as part of long-term savings or as part of pension schemes. Such foreign workers may be deterred from temporarily moving to Norway for work, when they risk taxation of any gains created during their time in Norway on such assets, regardless of whether they later sell, keep or loose such assets. 


  • The proposal deviates from one of the foundations of the Norwegian Tax Act, being the realization principle (i.e. capital gains are not taxed until an asset is realized), The deviation may have significant consequences. Business owners that emigrates from Norway may be forced to distribute dividends and drain their Norwegian companies to finance the exit tax. If an emigrant owns shares in a company that later significantly reduces its value or goes bankrupt, the exit tax is still payable. As a result, the taxation could far exceed the actual value the individual receives when his shares or other relevant assets later are realized. Taxation regardless of the value received by a shareholder is draconian and contradict the principle of ability to pay.


  • The Norwegian government proposes that the death of an emigrated taxpayer should trigger an immediate payment of the exit tax, when the emigrated taxpayer has chosen to postpone payment of the exit tax under the new 12-years rule. In reality the proposal thereby stealthily reintroduces inheritance tax on assets such as shares, but only for those individuals that have emigrated. This results in discrimination of persons emigrating to other countries, compared with individuals remaining in Norway. This discriminatory treatment has not been mentioned or assessed by the Government in the proposed bill.


  • The effects of the proposal are most adverse for entrepreneurs, venture capitalists and long- term family owned enterprises with generational/perpetual horizons. In a time where Norway is in the midst of a green transition, this proposal is effectively doing the complete opposite of what also the Ministry and the Government themselves declare as a goal. The proposal will in effect make it less attractive to start new business and maintain existing business in Norway, giving Norwegian owners and capital a disadvantage compared to foreign investments and will ultimately add to an already manifested incentive for entrepreneurs and capitalists to move abroad.

Several stakeholders have submitted their comments on the proposed bill. The Ministry of Finance has to our knowledge not yet stated when the final proposal will be presented to the Parliament. One potential date of presenting the final proposal could be in the national budget presented during autumn of 2024. 

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