Taxation in Norway

Norwegian Mortgages

Over recent years, the price of property in Norway has increased at a steady rate, producing a national average of 7.5 percent. Of course, with a country that has so many different regions, it is not surprising that some areas perform better than others and that some of the faster growing regions have seen more boom growth

Taxation in Norway

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Introduction to Taxation in Norway
Taxation in Norway is a large issue for foreign investors, not least because it is seen as being substantially higher than in most other European countries. These higher rates are used to finance an extremely advanced social and welfare state, with many subsidies and tax breaks available in certain circumstances.

Overview of the Tax Situation in Norway
Although the general perception that taxes are higher in Norway than in the UK is at least partially accurate, there are, nevertheless, a multitude of subsidies and tax breaks available that can actually make the overall picture substantially more favourable than it at first appears.

Taxes are paid to three different authorities in Norway, not simply to one general ¡¥governmental pot¡¦. Taxes are paid to the local authority, the county and to the state. As a broad outline, income tax is only paid by residents, based on exact income. Even if you are employed in Norway, there are double taxation treaties in place which may allow you to receive your income gross and to pay the tax in your home country.

More important for property investors, is the property tax that is levied on all assets such as property, land, cars and even cash in the bank.

Different Taxes in Norway
Many individuals opt to purchase property in Norway through a Norwegian company. Although this is not strictly necessary, as foreign individuals are allowed to purchase property directly, in Norway, it can offer certain tax advantages. The standard rate of corporation tax in Norway is 28 percent, which is substantially below the income tax level for higher rate payers in the UK. Therefore, some individuals may benefit from paying this tax and obtaining dividends rather than property profits.

Stamp duty in Norway is a set charge of 2.5 percent of the purchase price. This is a national tax and does not vary based on area or on the size or type of the property.

It is worth noting that Norway taxes property and the income derived from property based on a municipal level. This means that, depending on where you purchase the property, you will be subject to different rates of taxation.

Wealth tax is the main tax to be aware of as a property owner and returns will have to be filed annually to municipal authorities to ensure that you are paying the correct rates. The first 10,000 Kroner of rental income is tax exempt, in Norway; however, returns should still be filed.

Summary
Bullet Point The taxation system in Norway is both complicated and potentially very costly;
Bullet Point tax is paid at three different levels: local authority, county and national;
Bullet Point wealth tax is payable at local authority level; therefore, the amount of tax you pay on your property may vary wildly, depending on where exactly you buy.

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