Does Norway really have some of the highest taxes in the world?
Norway is known for having high taxes, but is it really among the countries with the highest income tax in the world?
Norway’s reputation for healthy wages goes hand in hand with its infamy for its high taxes, which, among other things, also means there is a high cost of living in the Scandinavian country.
The high taxes in Norway have even led the super-rich to abandon the country in flocks and droves due to the controversial wealth tax.
Tax residents of Norway pay income tax at a rate of 22 percent of their earnings. Income tax is paid in addition to bracket tax. Unlike income tax, this is a progressive tax – essentially, the more you earn, the more you pay.
Personal income between 198,350 kroner and 279,149 kroner is subject to a bracket tax of 1.7 percent. Those who earn between 279,150 kroner and 642,949 kroner pay a bracket tax of 4 percent.
Those who earn more than this pay significantly more in bracket tax.
Residents who make between 642,950 kroner and 926,799 pay 13.5 percent. Taxpayers with a take home of 926,800 and 1,499,999 pay a bracket tax rate of 16.5 percent. Meanwhile, those who take home more than 1.5 million kroner annually pay a 17.5 percent bracket tax.
In taxes alone, the highest earners in Norway therefore pay around 39.5 percent income tax. Those earning closer to the average salary will instead have a tax rate of approximately 26 percent. Workers in Norway also have national insurance contributions deducted from their wages. For most, this will be between 7.9 percent and 11.1 percent of one’s wages.
This is in addition to other direct taxes. Norway has a wealth tax system. The wealth tax in Norway ranges between 1 and 1.1 percent of ones net wealth. Those with a net wealth of more than 1.7 million kroner pay 1 percent and those with 20 million kroner pay 1.1 percent.
The tax isn’t just for the super-rich. As its net wealth, those who are mortgage-free may be liable for wealth tax as property counts towards one’s net wealth (with a discount rate of 25 percent for primary homes).
Where this particular tax has proved controversial is that the tax is levied against non-liquid assets. This can make the tax much more challenging to pay for those who aren’t cash-rich.
While someone may have a mortgage-free home and a car, they may not have the financial liquidity to pay off the value of that in wealth tax.
Those whose wealth is kept in shares and investments are essentially double taxed, too, as they are taxed on the gains when they liquidate their assets to pay the wealth tax.
READ ALSO: What you need to know about wealth tax in Norway
How does Norway compare to other countries?
Different countries around the world have different tax systems and regulations, which can make direct comparisons tough, and solid figures hard to come by.
Norway’s neighbour, Denmark, is considered among the countries in the world with the highest income taxes. There, 45.1 percent of salaries are taxed.
This is compared to around 26 percent (income and bracket tax in Norway) or 33.9 percent when you include the social security payments.
In Sweden, the municipal tax rate is between 32 and 35 percent, depending on where you live. The highest earners also pay a further 20 percent on annual income over a certain threshold, set at 598,500 Swedish kronor (53,800 euros) for 2023. This means income tax in Sweden can be up to 55 percent.
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In comparison, Norway’s top tax rate is 39.5 percent on income tax and 7.9 percent in national insurance contribution, putting it below the likes of Austria (55 percent), Belgium (53.5 percent), Finland (54.4 percent), France (55.4 percent), and the Netherlands at (49.5 percent), according to figures by the Tax Foundation.
This is without the wealth tax that is levied in Norway. With the wealth tax, Norway's highest earners and richest residents may pay more in tax than those in countries with higher income tax, but no wealth tax.
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Norway’s reputation for healthy wages goes hand in hand with its infamy for its high taxes, which, among other things, also means there is a high cost of living in the Scandinavian country.
The high taxes in Norway have even led the super-rich to abandon the country in flocks and droves due to the controversial wealth tax.
Tax residents of Norway pay income tax at a rate of 22 percent of their earnings. Income tax is paid in addition to bracket tax. Unlike income tax, this is a progressive tax – essentially, the more you earn, the more you pay.
Personal income between 198,350 kroner and 279,149 kroner is subject to a bracket tax of 1.7 percent. Those who earn between 279,150 kroner and 642,949 kroner pay a bracket tax of 4 percent.
Those who earn more than this pay significantly more in bracket tax.
Residents who make between 642,950 kroner and 926,799 pay 13.5 percent. Taxpayers with a take home of 926,800 and 1,499,999 pay a bracket tax rate of 16.5 percent. Meanwhile, those who take home more than 1.5 million kroner annually pay a 17.5 percent bracket tax.
In taxes alone, the highest earners in Norway therefore pay around 39.5 percent income tax. Those earning closer to the average salary will instead have a tax rate of approximately 26 percent. Workers in Norway also have national insurance contributions deducted from their wages. For most, this will be between 7.9 percent and 11.1 percent of one’s wages.
This is in addition to other direct taxes. Norway has a wealth tax system. The wealth tax in Norway ranges between 1 and 1.1 percent of ones net wealth. Those with a net wealth of more than 1.7 million kroner pay 1 percent and those with 20 million kroner pay 1.1 percent.
The tax isn’t just for the super-rich. As its net wealth, those who are mortgage-free may be liable for wealth tax as property counts towards one’s net wealth (with a discount rate of 25 percent for primary homes).
Where this particular tax has proved controversial is that the tax is levied against non-liquid assets. This can make the tax much more challenging to pay for those who aren’t cash-rich.
While someone may have a mortgage-free home and a car, they may not have the financial liquidity to pay off the value of that in wealth tax.
Those whose wealth is kept in shares and investments are essentially double taxed, too, as they are taxed on the gains when they liquidate their assets to pay the wealth tax.
READ ALSO: What you need to know about wealth tax in Norway
How does Norway compare to other countries?
Different countries around the world have different tax systems and regulations, which can make direct comparisons tough, and solid figures hard to come by.
Norway’s neighbour, Denmark, is considered among the countries in the world with the highest income taxes. There, 45.1 percent of salaries are taxed.
This is compared to around 26 percent (income and bracket tax in Norway) or 33.9 percent when you include the social security payments.
In Sweden, the municipal tax rate is between 32 and 35 percent, depending on where you live. The highest earners also pay a further 20 percent on annual income over a certain threshold, set at 598,500 Swedish kronor (53,800 euros) for 2023. This means income tax in Sweden can be up to 55 percent.
READ MORE:
In comparison, Norway’s top tax rate is 39.5 percent on income tax and 7.9 percent in national insurance contribution, putting it below the likes of Austria (55 percent), Belgium (53.5 percent), Finland (54.4 percent), France (55.4 percent), and the Netherlands at (49.5 percent), according to figures by the Tax Foundation.
This is without the wealth tax that is levied in Norway. With the wealth tax, Norway's highest earners and richest residents may pay more in tax than those in countries with higher income tax, but no wealth tax.
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