The Norwegian government enacted significant amendments to the exit tax rules in the 2025 national budget. The changes aim to close existing tax loopholes and ensure a fairer taxation system for individuals leaving Norway. The new rules aim to prevent owners with accrued capital gains from avoiding paying Norwegian tax on those gains by leaving the country.
The prior rules included a provision that Norwegian residents who changed their tax residence to another country may be subject to exit tax. The tax is triggered when a Norwegian individual tax resident relocates from Norway and the individual owns shares with latent capital gain on the date of departure. Under the prior rules, unrealised gains on shares and ownership interests in Norwegian companies were generally taxed when an individual moved out of Norway and became tax resident in another jurisdiction. Tax was levied at a 37.84% rate, calculated on the unrealised capital gains in shares and securities as if the shares/ownership interests were realised on the day before emigration. However, the following rules applied:
The framework of the existing exit tax rules remains in force, but some important changes have been introduced:
The amendments to the exit tax rules in Norway's 2025 national budget represent a substantial shift in the country's approach to the taxation of expatriates. By closing existing loopholes and enhancing enforcement measures, the government aims to create a more equitable tax system. Taxpayers are advised to stay informed about these changes and seek professional advice to navigate the new regulations effectively.
For assistance or additional information on the new rules, please reach out to your regular BDO contact or the author of this article.
Anders Urdal
BDO in Norway
Prior Rules
The prior rules included a provision that Norwegian residents who changed their tax residence to another country may be subject to exit tax. The tax is triggered when a Norwegian individual tax resident relocates from Norway and the individual owns shares with latent capital gain on the date of departure. Under the prior rules, unrealised gains on shares and ownership interests in Norwegian companies were generally taxed when an individual moved out of Norway and became tax resident in another jurisdiction. Tax was levied at a 37.84% rate, calculated on the unrealised capital gains in shares and securities as if the shares/ownership interests were realised on the day before emigration. However, the following rules applied:
- For individuals who relocated before 29 November 2022, the exit tax was waived after five years abroad.
- For individuals who relocated between 29 November 2022 and 20 March 2024, the exit tax payment could be deferred until gains on the shares were realised.
Key Amendments
The framework of the existing exit tax rules remains in force, but some important changes have been introduced:
- The existing NOK 500,000 threshold is replaced by a 3 MNOK basic allowance, which means that only capital gains above this amount are effectively taxed. The new exit tax on capital gains will therefore be assessed only on individuals with the greatest wealth.
- The exit tax on capital gains will not be levied on emigrants who died, provided their heirs reside in Norway. If they reside abroad, they have the option to defer the payment of the tax. The tax will be waived if they return to Norway within a 12-year period.
- The shares can be used as collateral for the tax owed.
- Payment of the exit tax must take place in conjunction with the payment and taxation of dividends. This is to avoid situations whereby business owners would leave Norway, decrease their company’s value by distributing a significant amount of dividends, and then return to Norway to sell the company at a much lower value, thus reducing or even eliminating the capital gains tax due.
Implications for Taxpayers
The changes to the exit tax rules are expected to have significant implications for taxpayers planning to leave Norway. It is crucial for individuals to understand the new rules and assess their potential impact on their financial situation. Tax advisors recommend reviewing asset portfolios and considering the timing of relocation to mitigate potential tax liabilities.
Conclusion
The amendments to the exit tax rules in Norway's 2025 national budget represent a substantial shift in the country's approach to the taxation of expatriates. By closing existing loopholes and enhancing enforcement measures, the government aims to create a more equitable tax system. Taxpayers are advised to stay informed about these changes and seek professional advice to navigate the new regulations effectively.For assistance or additional information on the new rules, please reach out to your regular BDO contact or the author of this article.
Anders Urdal
BDO in Norway