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Friday, March 29, 2024

Fortune tax hits foreign workers

Starting this year, some foreigners who live in their home country but work in Norway will have to pay Norwegian taxes on their wealth at home. The changes come despite Finance Minister Siv Jensen’s plans to cut taxes on Norwegians’ own net worth, or eliminate them altogether.

Tax authorities here at Skatt Øst, the regional tax office for eastern Norway, face a huge new tax investigation. PHOTO: newsinenglish.no
New tax agreements made with the UK and the Netherlands mean workers who commute to Norway are now liable to pay wealth tax under Norwegian tax laws on their assets at home. Neither the UK nor the Netherlands taxes its citizens based on net wealth. Tax is administered by regional authorities throughout Norway, including Oslo-based Skatt Øst. PHOTO: newsinenglish.no

British and Dutch workers who remain based in their homelands must from this year pay Norway’s controversial fortune tax (called formueskatt) on their net assets, reports newspaper Aftenposten. The home countries’ rules applied in practice under the previous tax agreements, but neither Britain nor the Netherlands enforced a  tax on net worth.

“A Brit or Dutch person who commutes here weekly can now be charged Norwegian wealth tax on foreign homes, holiday homes, cars, shareholdings and bank deposits,” said Martin Wikborg at law firm Visma. The Finance Ministry confirmed this to newspaper Aftenposten.

Norway has now started to remove fortune tax from its tax agreements with other countries. If certain conditions are met, it means foreign workers will have to pay Norwegian fortune tax on both their assets in Norway and their homeland. The move came despite the new conservative government’s platform to “scale down fortune tax by raising the tax-free allowance and lowering rates.” A 0.1 percent reduction proposed by the government last November would lower the wealth tax to 1 percent, in a bid to encourage savings and promote economic growth.

Jørgen Næsje, state secretary in the Finance Ministry from the Progress Party (Fremskrittspartiet, FrP), said the goal of international tax agreements was to prevent double taxation of people who are taxable in several countries. When there’s no fortune or wealth tax in other countries, there’s not a danger of that happening, so wealth tax does not need to be a part of those international tax agreements, the previous left-center government reasoned. It’s been left to the new government to enforce.

Avoid double taxation and double avoidance
“Neither should the tax agreement contribute to double non-taxation,” Næsje wrote in an email to Aftenposten. If fortune tax is no longer covered in the tax agreements, it means “that Norway still can, according to Norwegian legislation, impose fortune tax on those who are taxable in Norway.” If workers are not charged a fortune tax in their home country, Næsje wrote it is “not unreasonable” to make them liable in the country where they work. Commuters who work full-time in Norway all year are deemed tax residents in Norway.

The new tax agreement with Great Britain was signed under the previous government last March, and came into force under the new government last December.

newsinenglish.no/Emily Woodgate

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