The Norwegian Government will introduce a resource rent tax on onshore wind power from 2024

The Government proposes to introduce a resource rent tax on onshore wind power with an effective tax rate of 35 per cent. The resource rent tax will take effect from 1 January 2024.

The legislation was proposed in Prop. 2 LS (2023-2024) (in Norwegian only).

• The tax is structured as a cash flow tax, with an immediate deduction of investment costs.
• The effective tax rate will be 35 per cent, i.e. lower than the consultation proposal of 40 per cent.
• For investments made before 1 January 2024, a deduction is granted through depreciation of the input value, in addition to a compensation (deferment interest) for depreciations taking place over time. The input value is calculated in accordance with ordinary declining-balance depreciation rules for all existing wind farms.
• The value of the annual production of a wind farm shall, as a general rule, be based on spot market prices. However, an exemption from the general rule will be introduced for power purchase agreements concluded before 28 September 2022. A temporary exemption is also proposed for standard fixed-price agreements (corresponding to the exemption for hydropower), as well as for long-term physical power purchase agreements for new projects concluded during the period 2024-2030.
• Negative resource rent income will be carried forward with an interest supplement, and the tax value of any negative resource rent income will be paid to the taxpayer upon discontinuation of operations.

The Government’s press release is available here.

This article was first published in IBFD

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