What you need to know about wealth tax in Norway
Norway's wealth tax applies to many more people than the super-rich. But how is the tax calculated and who has to pay?
From an international perspective, Norway is famous for quite a lot of things. On the one hand, people admire its incredible nature and scenery (fjords, mountains, and rugged landscapes), rich historical and cultural heritage (just think of the Viking Age), and overall quality of life.
On the other, they dread the high costs of living, the, at times, harsh weather, and – somewhat high tax levels.
EXPLAINED: How does Norway's bracket tax for income work?
Wealth tax is just one of the several taxes in fees you'll need to pay if you're living and working in Norway.
Generally speaking, wealth tax is a type of tax levied on your net wealth, which is the total value of your assets minus any debts or liabilities.
Property is a good example of how net wealth is considered when measuring assets. If you have a mortgage on the property, you won't be charged wealth tax on the full value of your home, as what you owe the bank will be deducted from the market value. Additionally, one's primary residence is only valued at 25 percent of the market value for tax purposes.
Another example would be any outstanding student loans being subtracted from your total net worth.
Wealth taxes: Key information
Taxpayers in Norway need to pay both municipal wealth tax and state wealth tax.
The municipal wealth tax rate in the country amounts to 0.7 percent, and it is calculated based on your assets exceeding a net capital tax basis of 1.7 million kroner for single or unmarried taxpayers and 3.4 million kroner for married couples in Norway.
Along with the municipal wealth tax, there is also a state wealth tax rate. This tax amounts to 0.3 percent and is calculated based on your assets exceeding a net capital tax basis of 1.7 million kroner if you're single or unmarried or 3.4 million kroner for married couples.
Last year, a new tax class was introduced for the state wealth tax rate. If you're lucky enough to have a net wealth that exceeds 20 million kroner (or 40 million kroner for married couples), the rate amounts to 0.4 percent.
If you take all of the aforementioned factors into account, the maximum wealth tax rate in Norway is 1.1 percent.
Wealth tax classes
The municipal wealth tax has two tax classes, while the state wealth tax has three, as the Norwegian Tax Administration points out on its website.
The breakdown in the tax rates can be found below (the thresholds are stated for single taxpayers. For spouses who are assessed jointly on their joint wealth, the thresholds are twice the amounts shown below):
Municipal wealth tax
Tax class 0: 0 - 1,700,000 kroner = 0.0 percent
Tax class 1: 1,700,001 kroner and above = 0.7 percent
State wealth tax
Tax class 0: 0 - 1,700,000 kroner = 0.0 percent
Tax class 1: 1,700,001 - 20,000,000 kroner = 0.3 percent
Tax class 2: 20,000,001 kroner and above = 0.4 percent
Wealth tax discounts (valuation discounts)
Norwegian taxpayers can also get valuation discounts on their wealth tax. These discounts are reductions in the estimated value of certain assets that account for factors like difficulty in selling or lack of control. They lower the taxable value of your assets, reducing your overall tax payment.
In Norway, valuation discounts are given automatically in the pre-filled tax assessment you'll receive from the tax authorities. In it, your taxable wealth of real property will be entered after the deduction of valuation discounts.
You can find more details on how valuation discounts work on this webpage of the Tax Administration.
Note that valuation discounts only include assets owned directly by you as the taxpayer, such as housing and commercial property, shares, and fixed assets.
Another example of a discounted asset is property, where only 25 percent of the property's value is taken into account.
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From an international perspective, Norway is famous for quite a lot of things. On the one hand, people admire its incredible nature and scenery (fjords, mountains, and rugged landscapes), rich historical and cultural heritage (just think of the Viking Age), and overall quality of life.
On the other, they dread the high costs of living, the, at times, harsh weather, and – somewhat high tax levels.
EXPLAINED: How does Norway's bracket tax for income work?
Wealth tax is just one of the several taxes in fees you'll need to pay if you're living and working in Norway.
Generally speaking, wealth tax is a type of tax levied on your net wealth, which is the total value of your assets minus any debts or liabilities.
Wealth taxes: Key information
Taxpayers in Norway need to pay both municipal wealth tax and state wealth tax.
The municipal wealth tax rate in the country amounts to 0.7 percent, and it is calculated based on your assets exceeding a net capital tax basis of 1.7 million kroner for single or unmarried taxpayers and 3.4 million kroner for married couples in Norway.
Along with the municipal wealth tax, there is also a state wealth tax rate. This tax amounts to 0.3 percent and is calculated based on your assets exceeding a net capital tax basis of 1.7 million kroner if you're single or unmarried or 3.4 million kroner for married couples.
Last year, a new tax class was introduced for the state wealth tax rate. If you're lucky enough to have a net wealth that exceeds 20 million kroner (or 40 million kroner for married couples), the rate amounts to 0.4 percent.
If you take all of the aforementioned factors into account, the maximum wealth tax rate in Norway is 1.1 percent.
Wealth tax classes
The municipal wealth tax has two tax classes, while the state wealth tax has three, as the Norwegian Tax Administration points out on its website.
The breakdown in the tax rates can be found below (the thresholds are stated for single taxpayers. For spouses who are assessed jointly on their joint wealth, the thresholds are twice the amounts shown below):
Municipal wealth tax
Tax class 0: 0 - 1,700,000 kroner = 0.0 percent
Tax class 1: 1,700,001 kroner and above = 0.7 percent
State wealth tax
Tax class 0: 0 - 1,700,000 kroner = 0.0 percent
Tax class 1: 1,700,001 - 20,000,000 kroner = 0.3 percent
Tax class 2: 20,000,001 kroner and above = 0.4 percent
Wealth tax discounts (valuation discounts)
Norwegian taxpayers can also get valuation discounts on their wealth tax. These discounts are reductions in the estimated value of certain assets that account for factors like difficulty in selling or lack of control. They lower the taxable value of your assets, reducing your overall tax payment.
In Norway, valuation discounts are given automatically in the pre-filled tax assessment you'll receive from the tax authorities. In it, your taxable wealth of real property will be entered after the deduction of valuation discounts.
You can find more details on how valuation discounts work on this webpage of the Tax Administration.
Note that valuation discounts only include assets owned directly by you as the taxpayer, such as housing and commercial property, shares, and fixed assets.
Another example of a discounted asset is property, where only 25 percent of the property's value is taken into account.
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