NORWAY Law and Practice Contributed by: Sicilie Tveøy, Lars Christensen, Ramborg Elvebakk and Karen Margrethe Bugge, Advokatfirmaet Hjort AS
Advokatfirmaet Hjort AS Universitetsgata 1 0164 Oslo Norway Tel: +47 2247 1800 Fax: +47 2247 1818 Email: advokatfirmaet@hjort.no Web: www.hjort.no
1. Tax 1.1 Tax Regimes
Norway follows the “continuity principle”, therefore the recipient also inherits the donor’s tax basis on the assets, with some modifications. 1.3 Income Tax Planning Norway’s tax system provides some planning oppor - tunities, although the “continuity principle” limits classic basis step-up strategies. Under continuity, if assets are given as gifts or passed to heirs at death, the recipient takes over the donor’s tax basis. This means no automatic step-up to fair market value at death or gift – unrealised capital gains carry over to the heir. There are a few planning opportunities that can be mentioned for properties. • If the owner, as a result of use, has achieved tax exemption upon sale (applies to primary and vaca - tion homes), the properties can be sold and the proceeds can be fully gifted or bequeathed. • After death, the estate can use the tax exemption on housing and vacation homes by selling and thus utilising the tax exemption the deceased had accrued. • Generally, secondary homes are taxed. By moving into the secondary home and making it the primary residence, the tax can be avoided. Regarding shares, dividends and gains on shares, they are largely tax-free in companies. The income is taxed only when funds are withdrawn to a personal shareholder, who pays dividends at an effective rate of 37.84%. Most individuals with significant wealth therefore choose to keep their investments in a com - pany, allowing the value to grow within the company
Norway’s tax system for individuals is characterised by progressive income tax, a net wealth tax, and no inheritance or gift tax. Individuals pay up to approxi - mately 47% combined income tax on salary and capi - tal income (ordinary income tax 22% plus bracket tax - es) depending on income level. Furthermore, Norway has a net wealth tax, levied annually on an individual’s global net assets above a threshold of NOK1.7 million for singles and double for couples. The wealth tax rates are 0.85% (municipal and state tax on net wealth up to approximately NOK20.7 million), and 1.1% on wealth beyond that amount. The value of the assets is set differently by tax rules. Companies do not pay wealth tax. There are no estate, inheritance or gift taxes in Norway. Norway does not impose a separate generation-skipping transfer tax. Other relevant taxes include municipal property taxes from 0.1% to 0.4% of property value, based on each municipality’s discretion. Overall, the tax regime relies on income and wealth taxation rather than transfer taxes. 1.2 Exemptions Since Norway has no inheritance, estate or gift tax, there are no specific tax exemptions for transfers by death or gift. Gifts and inheritances pass tax-free to the recipient.
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