Braekhus on Norway National Budget proposal 2023

Braekhus on Norway National Budget proposal 2023

Hjørdis Larsen, Senior Tax Manager at Breakhus, reports on the Norway National Budget proposal 2023

Hjørdis Larsen

Increased Employer payments to National Insurance – proposal

It is recommended that an additional 5% employer national insurance payment be charged on employment income in excess of NOK 750 000. The standard tax rates will apply to income up to NOK 750 000, after which the additional levy will be applied.

Firms with relatively well compensated employees, particularly international employers with staff covered by the Norwegian National Insurance plan, will experience higher labor costs as a result.

Personal income tax- proposed

It is planned to make minor adjustments to the two lower tax bracket levels and to reduce the national insurance payment rate for employees.

The marginal tax rate is unchanged at 47.4%.

The preferential tax treatment of employer-provided electric vehicles for personal usage is eliminated. The taxable advantage for electric vehicles will adhere to the standard taxation regulations for company vehicles.

Dividends and capital gains tax – proposal

The effective tax rate applicable to dividends and capital gains on the sale of shares will increase from 35.2% to 37.84%. To prevent tax-driven transactions, the rise should go into effect on October 6, 2022.

Proposed wealth tax

The wealth tax exemption value of NOK 1.7 million stays unchanged.

The discount on valuation for stocks and mutual funds is decreased from 25% to 20%.

It is recommended that the tax rate on net worth in excess of NOK 1,7 million and less than NOK 20 million should increase to 1%, while the tax rate on net wealth in excess of NOK 20 million should remain unchanged at 1.1%.

With no increase in the tax-free amount and a reduction in the valuation rebate for stocks, a greater proportion of taxpayers must anticipate paying wealth tax.

Other

In addition to tightening the resource rent tax on hydropower, a new resource rent tax on aquaculture and land-based wind generation is suggested. These are likely to be implemented beginning in 2023.

At the earliest, the previously proposed legal basis for taxation of income earned by foreign employees and employers engaged in activities related to renewable energy production, mineral activities, and carbon capture and storage on the Norwegian continental shelf is not expected to take effect until 2024.

The implementation of a special tax on private consumption in corporations, sometimes known as a monster tax, is postponed pending additional review.

Link to the law firm’s website for further information

Picture (c): www.braekhus.no

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