Norway has unveiled plans to remove a loophole used by the Nordic nation’s richest as they are leaving the country, as the government tries to drag more tax revenue out of the fleeing billionaires.
The plan comes after reports that dozens of Norway’s richest have migrated, mainly to Switzerland, during the past two years following the minority Labor-led government’s push to steeply raise wealth and dividend taxes.
For people leaving, an exit tax on unrealized changes in the value of their assets, or transfer of such assets, would have to be paid within 12 years, starting immediately, according to Cabinet proposals. An earlier change of rules in November 2022 meant that the payment of such a tax could be postponed indefinitely until such gains were realized.
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“I am amazed that it has taken the government such a long time to realize that they need to set a time limit,” said Guttorm Schjelderup, a professor at the Norwegian School of Economics. “It was obvious and leaves the impression that this government is slow to respond to the challenges it faces.”
Under the proposals, the threshold for an exit tax would remain at 500,000 kroner ($47,000), while it will be lowered to 100,000 kroner for transfers of such assets, unless the relocation happens in the same year as the transfer.
People leaving can either pay the capital gains tax immediately, interest-free over 12 years, or with interest after the 12-year period, the government said.
“The government wants to ensure that values that are accumulated while living in Norway are actually taxed here and that the tax is paid,” Finance Minister Trygve Slagsvold Vedum said in a statement. “It’s fair and important for both trust in the tax system and the community.”
A second change to rules, seeking to balance the system, would limit the exit tax to value changes during the owner’s residency in Norway, while it previously also applied to gains accrued before moving to the country.