Norway is among a small number of countries that levy an annual net wealth tax, which can have significant implications for foreign individuals living in or relocating to Norway. This article outlines the key aspects of Norwegian wealth tax regulations, including residency criteria, valuation methods for different asset classes, applicable tax rates, and important exemptions. Understanding these provisions is essential for foreign individuals to effectively plan their finances and comply with Norwegian tax law.
Tax Residency Status and Liability
Becoming a Norwegian Tax Resident
You become a tax resident of Norway if you stay in the country for more than 183 days during any 12-month period or more than 270 days during any 36-month period. All calendar days in Norway count toward this calculation, with partial days counting as full days.
If your stay exceeds 183 days during your first year in Norway, you'll be considered a tax resident from your first day in the country. If these 183 days are split across two different income years, your tax residency begins on January 1st of the second income year.
Scope of Tax Liability
As a Norwegian tax resident, you are generally liable for wealth tax on your global assets. While Norway has established tax treaties with approximately 90 countries that typically provide protection against double income taxation, most of these treaties do not extend to wealth tax. This means that wealth tax is primarily regulated by internal Norwegian law.
However, residents from certain countries may be exempt from Norwegian wealth tax due to specific provisions in bilateral tax treaties. As of January 2024, these countries include Barbados, Benin, Bonaire, Bosnia-Herzegovina, Brazil, Curaçao, The Philippines, Indonesia, Israel, Italy, Kenya, China, Croatia, Morocco, Montenegro, Saba, Sri Lanka, St. Maarten, St. Eustatius, Tunisia, USA, and Zimbabwe.
Wealth Tax Basis and Rates
Net Wealth Calculation
The Norwegian wealth tax is based on your global net worth—the total value of all your assets worldwide minus deductible debt. This calculation occurs on December 31st of each income year (or at a different time for deviating financial years).
Threshold and Rates
For the 2024 income year, wealth tax applies only if your net wealth exceeds:
NOK 1.7 million for single-person households
NOK 3.4 million for married couples
The tax rates are:
1% on net wealth between the threshold and NOK 20 million
1.1% on net wealth exceeding NOK 20 million
Asset Valuation and Discounts
While the general rule is that assets are valued at market price, Norwegian tax law provides valuation discounts for certain asset categories, which reduce the wealth tax basis.
Overview of Valuation Discounts (2024)
Residential Properties
Primary Residence: 25% of market value up to NOK 10 million; 70% of market value exceeding NOK 10 million
Secondary Residence: 100% of calculated sales value (no discount)
Holiday Residence: 30% of documented sales value or construction cost
Foreign Properties
Residential/Holiday Properties Abroad: 30% of documented sales value or construction cost
Leased Commercial Property Abroad: 80% of rental value divided by a calculation factor
Non-leased Commercial Property Abroad: 80% of market value or cost price
Other Assets
Shares and Equity Investments: 80% of market value
Bank Deposits: 100% of the value (no discount)
Operating Assets: 70% of the asset's value
Movables and Household Contents: 0% if under NOK 100,000; varying rates for higher values
Residential Property Valuation Examples
Primary Residence
A primary residence worth NOK 8 million would be valued at NOK 2 million (25% of market value). For a residence worth NOK 14 million, the valuation would be NOK 2.5 million (25% of the first NOK 10 million) plus NOK 2.8 million (70% of the remaining NOK 4 million), totaling NOK 5.3 million.
Holiday Residence
A holiday residence worth NOK 2 million would be valued at NOK 600,000 (30% of market value), with a valuation discount of NOK 1.4 million.
Commercial Property Considerations
Commercial properties, including office premises, shops, warehouses, factories, hotels, and car parks, are generally valued at 80% of rental value. The valuation process depends on whether the property is leased:
Leased Commercial Property: Valued at 80% of calculated rental value or documented market value
Non-leased Commercial Property: Valued at 80% of estimated rental value based on area and standardized square meter rent calculations
Debt Deductions
As a general rule, 100% of debt associated with assets can be deducted when calculating net wealth. However, if debt is linked to assets with valuation discounts, the debt deduction will be reduced proportionately. For married couples or registered partners, debt deduction calculations are based on the combined assets and debts of both individuals.
All types of debt are deductible, including debt linked to foreign assets. However, if foreign assets are exempt from Norwegian taxation due to international agreements, the taxpayer's debt deduction must be limited proportionately, regardless of whether the other country actually levies a wealth tax.
Special Asset Categories
Shares and Investments
The gross assessment value for shares is 80% of market value, providing a 20% discount. This discount also applies to the share component of savings accounts and investment accounts.
Bank Deposits
Bank deposits are valued at 100% of their amount both in Norway and abroad, with no valuation discount. Foreign currency deposits must be converted to Norwegian kroner when reporting.
Movables and Household Contents
Household contents and movable property valued below NOK 100,000 are exempt from wealth tax. For higher values, the following rates apply:
10% of value for assets worth up to NOK 1 million
20% of value for assets between NOK 1 million and NOK 1.4 million
40% of value for assets over NOK 1.4 million
Specific Movable Assets
Boats
Boats worth less than NOK 50,000 may be included in household contents
Boats worth NOK 50,000 or more that are individually insured are valued at 75% of the insured sum
Uninsured boats are valued at market value
Art
Art with market value under NOK 1 million: 0% valuation
Art as financial investment: 100% of market value
Cars
Cars in Norway: Valued based on new purchase price minus depreciation according to a standard scale
Cars abroad: Valued at estimated sales value in the registration country
Digital Currency
Digital currencies like Bitcoin are valued at 100% of their NOK sale value on January 1st following the income year, with no valuation discount.
Non-Taxable Assets
Certain assets are exempt from Norwegian wealth tax, including:
Conditional rights where claims can only be enforced if a future, uncertain condition arises
Time-limited rights of use
Time-limited rights to periodic benefits
Salary claims not yet due for payment
The value of goodwill and knowhow
Certain life insurance and pension savings schemes
Conclusion
Norwegian wealth tax regulations are complex and subject to annual changes through the state budget. Foreign individuals living in or relocating to Norway should carefully assess their global assets and apply the correct valuation methods to determine their tax liability. Understanding valuation discounts and debt deduction rules is particularly important for accurate wealth tax calculations.
Given the complexities involved and the potential for double taxation without treaty protection, foreign residents with significant assets should consider seeking professional tax advice to navigate Norwegian wealth tax regulations effectively.
