Skjerper reglene for utflyttingsskatt

Today, the Ministry of Finance published for consultation a proposal to amend the Norwegian exit tax rules applicable to individuals holding shares and similar assets. The proposal would require exit tax to be paid within 12 years and ensure that value increases accrued while the owner was resident in Norway are taxed in Norway.

The proposed changes are intended to apply to emigrations and transfers taking place on or after today.

Since the repeal of the five-year rule in 2022, exit tax no longer lapses after five years abroad, but payment may in practice be deferred indefinitely. The Government now proposes to change this.

The five-year rule

The so-called five-year rule was repealed with effect for emigrations and transfers taking place on or after 29 November 2022.

For individuals who emigrated before 29 November 2022, the exit tax liability lapses after five years abroad.
For individuals who emigrated between 29 November 2022 and today, payment of the exit tax may be deferred indefinitely until the assets are realized.
For emigrations or transfers taking place on or after today, the exit tax must be paid within 12 years.

New twelve-year rule

One of the two principal measures in the legislative proposal is to limit the deferral of assessed exit tax to a period of 12 years. Taxpayers would be given the choice of paying the tax immediately, in interest-free instalments over 12 years, or in a lump sum at the end of the 12-year period with interest added. If the taxpayer returns to Norway with the shares within the 12-year period, the exit tax will be cancelled or refunded.

Taxation limited to value increases accrued during Norwegian residence

The second principal measure is to limit the exit tax to gains accrued while the owner was resident in Norway. This means that Norway would no longer calculate exit tax on gains that arose before the individual became resident in Norway. Conversely, any decline in value after emigration would not reduce the amount of exit tax payable.

The Government also proposes several further changes to the exit tax regime:

The scope of the exit tax rules will be expanded to include share savings accounts and fund accounts.
A separate threshold of NOK 100,000 will be introduced for assessing exit tax on transfers of shares and similar assets containing a gift element to persons resident outside Norway.
The requirement to provide security will be made conditional upon a specific risk of non-payment.
It will be clarified that both realization of the assets and the taxpayer’s death trigger an obligation to settle the exit tax.
Where the taxpayer returns to Norway within the 12-year period, exit tax will lapse in respect of shares still held.
An exception will be introduced to the general time limits for reassessment in relation to exit tax determinations.