NORWAY Trends and Developments Contributed by: Bernhard Getz-Jeffreys and Johannes Wiegaard, Ro Sommernes Advokatfirma AS
This proposal is expected to increase corporate tax revenue by approximately NOK900 million annually, of which NOK700 million relates to taxation on the realisation of land development, primarily impacting 2027 and subsequent years. This reform addresses a long-standing concern about tax avoidance in the property development sector and represents the government’s commitment to closing loopholes that undermine the integrity of the tax system. However, concerns have been raised by industry stakeholders about the potential impact on new hous - ing construction. Critics argue that in a market where building costs are already high, removing this tax planning option may reduce incentives for new prop - erty development, particularly where unexpected tax costs could affect project viability. The government has attempted to address these concerns through the transitional provisions, which protect ongoing projects from unexpected tax burdens, but the longer-term impact on housing supply remains a subject of debate among business owners and developers. 1.3 Taxation of securities funds and fund accounts Up until 2026, securities funds were subject to ordinary income tax, with certain particular rules applicable to securities funds. For instance, interest payments to unitholders were deductible (and thus payable for the unitholder), and income not encompassed by the par - ticular participation exemption applicable to securities funds was taxable. The participation exemption for securities funds included capital gains upon realisa - tion of shares resident outside the EEA, in addition to the ordinary exemption within the EEA. These rules were not considered competitive, and sev - eral Norwegian funds notified their intention to relocate from Norway to other countries, mainly Sweden. This has led to changes to the taxation of securities funds that have been in effect from 2026. The amend - ments include exemption from ordinary taxation at the fund level for interest income and income from financial instruments used for risk management and currency hedging.
Dividends received directly or indirectly through part - nerships are also now exempt from ordinary taxation at the fund level, with a standard taxation of 1% of received dividends to ensure that abnormally high profits and low management costs do not result in complete tax exemption. Clarifications of the concept of “securities fund” will ensure that UCITS funds, Norwegian national funds, and equivalent funds established in other EEA coun - tries receive exemptions. Funds outside the EEA that do not meet the criteria will not be covered, and tran - sitional rules relating to market value determination for shares in funds are proposed. The revenue loss from these changes is estimated at approximately NOK570 million annually. These changes aim to create a more efficient and competi - tive framework for fund investments while maintaining appropriate taxation of extraordinary returns. The mar - ket has received the news well, and funds that prior to the changes had announced their intention to relocate have now notified their intention to remain in Norway. 1.4 Value-added tax adjustments The general VAT rate of 25% continues in 2026, with reduced rates for food (15%) and certain services (12%) maintained. Discussions are ongoing over whether to reduce the VAT rate for food, in light of similar amendments in the other Nordic countries. The threshold for the VAT exemption on the purchase and leasing of electric vehicles has been reduced from NOK500,000 to NOK300,000 with effect from 1 Janu - ary 2026, with a further reduction announced for 2027. 2. Ongoing challenges requiring continued attention Despite the reforms implemented in 2026, several structural challenges continue to require sustained policy attention. 2.1 Demographic pressures and fiscal sustainability One of the most significant challenges facing the tax system is the ageing population. As the number of retirees increases and the working-age population shrinks, the tax base will contract while public expen - ditures rise. Pension payments and healthcare costs
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