Update on the national budget for 2024

On 3 December 2023, the Norwegian Government, with support from the party SV, reached an agreement on the National Budget for 2024. From a tax perspective, the agreement involves alterations from the Government's original proposal, which includes adjustments in the bracket tax (No: “trinnskatt”) and certain climate-related taxes. Notably, the agreement does not include any further steps in the phase-out of the additional employer's national insurance contribution, which will apply for wages above NOK 850,000. An overview of the initially proposed National Budget can be found in the newsletter published on 6 October 2023.

The parties have agreed that the Government shall investigate the recommendations set forth by the tax committee concerning the deductible risk-free return (No: “skjermingsfradraget”) and the participation exemption method (No: “fritaksmetoden”). A thorough overview of the tax committee's report outlining a comprehensive tax reform in Norway can be found in the newsletter published on 10 January 2023.

The parties have agreed to lower the entry point in step 5 of the bracket tax, which will result in an increased tax burden for personal incomes surpassing NOK 1.35 million. It is noteworthy that the Government originally proposed raising the entry point in step 5 of the bracket tax to NOK 1.57 million.

The exit tax rules are extended to apply to transfer of shares etc. to all individuals who are tax residents or domiciled outside of Norway, as opposed to the previous scope which solely covered transfer of shares etc. to close family members. Consequently, the transfer of shares to individuals residing abroad will trigger taxation of the transferring individual on any calculated gains arising from the shares.

In reference to the tax committee's 2022 proposal, the parties have concurred that the Government will investigate the deductible risk-free return, including the mark-up, with the aim of enhancing the shareholder model. Additionally, the parties have agreed that the Government shall investigate the 3%-rule in the participation exemption method in light of the tax committee's proposal to increase the rate to 5%.

The Government has resolved the following changes in climate-related taxes:

• Change in the calculation method for the reimbursement of one-off tax on export;

• Increase of the CO2 component in the one-off tax on vans etc. (tax group B) with 10% above the price-adjusted level of 2023; and
• Reduction of the entry point in the CO2 component of the one-off tax for passenger cars etc. (tax group A) from 82 g/km to 70 g/km.