Five ways to legally lower your tax bill in Norway
Norway has a reputation for its high taxes. There are several deduction rules which can help lower your tax bill.
Norway has a reputation for healthy wages and steep taxes. In recent years, high taxes have even seen the super-wealthy leave the country in flocks and droves.
While weighing up whether you will need to become a tax exile is a luxury problem that many of us can only dream of, plenty of people out there wish to legally lower their tax bill.
READ ALSO: Does Norway really have some of the highest taxes in the world?
Thankfully, there are several ways of doing so. As a reminder, before engaging in any tax-cutting measures, consult a tax expert or contact the Norwegian Tax Administration for more details on the specifics of your particular situation.
Consider a BSU savings account
If you are in a fortunate position and can put away some money in savings each year, consider setting up a BSU savings account.
The BSU savings account is a specialized savings account that offers generous interest rates and an attractive tax deduction for savers putting money away for a home.
The BSU can only be used by those under 34, and the money must be used for property-related matters. You can deposit up to 27,500 kroner into a BSU account annually and receive a 10 percent tax deduction on the account’s value.
Many banks offer a BSU plus account, these allow for higher deposits but don’t come with the tax deduction.
BSU accounts can store up to 300,000 kroner, meaning a 30,000 kroner deduction if you reach the maximum limit.
Sell off any losing stocks
Norway taxes share returns very highly. Gains on shares are taxed at 37.8 percent. If your investments haven’t gone to plan, one of the best things to do may be to cut your losses.
This is because there is a 37.8 percent deductible on share losses. These deductibles apply for the year you sell your shares.
If you sold your shares in 2023, they would be included in the tax return for 2023 that arrives in 2024.
Therefore, it may be worth cutting your losses on investments for the tax deduction rather than persisting with them.
Interest on loans and mortgages abroad
Tax residents of Norway are taxed on their global income and assets. However, this also means that foreigners in Norway may be granted deductions for any interest they paid on loans and mortgages abroad.
You will need to manually add this information to your tax return to receive the deduction.
The Norwegian Tax Administration has an overview of how to add interest paid on foreign loans to your tax return.
Making sure childcare information is included
Kindergartens in Norway are obligated to submit information about customers to the Norwegian Tax Administration so that they can receive deductions for childcare costs.
However, these aren’t always included, so be sure to double-check your tax return. The cost of nannies and babysitters is also tax deductible.
The deduction is up to 25,000 kroner for one child and 15,000 kroner for subsequent children. The child can be a maximum of 11 years old at the end of the tax year to be entitled to a deduction.
Money can also be deducted if your kids belong to sports clubs and groups.
Deductions for taxes paid abroad
Norway has tax treaties in place with many countries to avoid double taxation. This means that you can receive a tax credit for income you have already been taxed on abroad.
The tax credit can be claimed for various kinds of income, such as salaries and pensions. This also applies to the sale of shares too.
The Norwegian Tax Administration has an overview of when you can get a credit deduction and how to apply for one.
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Norway has a reputation for healthy wages and steep taxes. In recent years, high taxes have even seen the super-wealthy leave the country in flocks and droves.
While weighing up whether you will need to become a tax exile is a luxury problem that many of us can only dream of, plenty of people out there wish to legally lower their tax bill.
READ ALSO: Does Norway really have some of the highest taxes in the world?
Thankfully, there are several ways of doing so. As a reminder, before engaging in any tax-cutting measures, consult a tax expert or contact the Norwegian Tax Administration for more details on the specifics of your particular situation.
Consider a BSU savings account
If you are in a fortunate position and can put away some money in savings each year, consider setting up a BSU savings account.
The BSU savings account is a specialized savings account that offers generous interest rates and an attractive tax deduction for savers putting money away for a home.
The BSU can only be used by those under 34, and the money must be used for property-related matters. You can deposit up to 27,500 kroner into a BSU account annually and receive a 10 percent tax deduction on the account’s value.
Many banks offer a BSU plus account, these allow for higher deposits but don’t come with the tax deduction.
BSU accounts can store up to 300,000 kroner, meaning a 30,000 kroner deduction if you reach the maximum limit.
Sell off any losing stocks
Norway taxes share returns very highly. Gains on shares are taxed at 37.8 percent. If your investments haven’t gone to plan, one of the best things to do may be to cut your losses.
This is because there is a 37.8 percent deductible on share losses. These deductibles apply for the year you sell your shares.
If you sold your shares in 2023, they would be included in the tax return for 2023 that arrives in 2024.
Therefore, it may be worth cutting your losses on investments for the tax deduction rather than persisting with them.
Interest on loans and mortgages abroad
Tax residents of Norway are taxed on their global income and assets. However, this also means that foreigners in Norway may be granted deductions for any interest they paid on loans and mortgages abroad.
You will need to manually add this information to your tax return to receive the deduction.
The Norwegian Tax Administration has an overview of how to add interest paid on foreign loans to your tax return.
Making sure childcare information is included
Kindergartens in Norway are obligated to submit information about customers to the Norwegian Tax Administration so that they can receive deductions for childcare costs.
However, these aren’t always included, so be sure to double-check your tax return. The cost of nannies and babysitters is also tax deductible.
The deduction is up to 25,000 kroner for one child and 15,000 kroner for subsequent children. The child can be a maximum of 11 years old at the end of the tax year to be entitled to a deduction.
Money can also be deducted if your kids belong to sports clubs and groups.
Deductions for taxes paid abroad
Norway has tax treaties in place with many countries to avoid double taxation. This means that you can receive a tax credit for income you have already been taxed on abroad.
The tax credit can be claimed for various kinds of income, such as salaries and pensions. This also applies to the sale of shares too.
The Norwegian Tax Administration has an overview of when you can get a credit deduction and how to apply for one.
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