Norway National Budget 2024 – summary of main proposals
Here are the most important proposals regarding tax in the 2024 National Budget.
The Norwegian Ministry of Finance published the 2024 National Budget (full text in Norwegian only here) on 6 October 2023. The most important proposals regarding tax are as follows:
- The Government proposes to abolish the high-price contribution for wind power and hydropower (excise duty on power production) with effect from 1 October 2023. The temporary tax in the form of high-price contribution where justified by the special situation prevailing in Norway in 2022 and 2023, with extraordinary power sector revenues and increased expenditure in many areas. The Government believes that the extraordinary situation Norway was facing, is no longer applicable to the same extent.
- In the 2023 National Budget the Government introduced a temporary increase in employer’s social security contributions of 5% for gross salary exceeding NOK 750,000 per employee. The Government proposes that the threshold for the additional employer’s National Insurance contributions be increased to NOK 850,000 in 2024. This is the first step in the phasing out of this ad hoc tax.
- The tax-free allowance under the differentiated employer’s National Insurance contribution scheme is increased from NOK 500,000 to NOK 850,000.
- Wealth tax thresholds and limits are kept unchanged in nominal terms.
- The Government proposes to increase the commercial property discount rate by 1 percentage point for wealth tax valuation purposes for properties outside the major cities of Oslo, Bergen, Trondheim and Stavanger. The purpose of the proposal is to mitigate the regional differences in the calculation model such that commercial property in rural areas are not overvalued.
- The rules for tax-free reorganisation are changed, by codifying three typical cases from tax exempt practice. This applies to cross-border mergers of investment funds that are UCITS funds, mergers and divisions of savings banks where one or more savings bank foundations are created and conversion of merger and demerger claims. Historically taxpayers has had to apply for a tax exemption from the Ministry of Finance in these cases. The codification therefore removes uncertainty and provides predictability for the taxpayers.
The Government postponed the introduction of rules introducing taxation of private consumption in companies. The Government announced that it will publish a refined proposal for such tax in 2024. The rules are proposed to have effect from 2025. The rules on private consumption in companies were proposed in a public consultation paper (in Norwegian only) published 9 May 2022. The aim of the proposed legislation is to stop shareholders from owning certain assets for private consumption through a company
The Government announced that it is now reviewing the consultation responses received from the public consultation document published 6 June 2023 on implementation of part of the OECD Pillar Two GloBE Model Rules. The consultation document included draft legislation to introduce the Income Inclusion Rule and a Qualified Domestic Minimum Top-up tax. The Government announced that it will publish a proposal in 2023 and that the proposed rules will have effect from 1 January 2024.
This article was first published in IBFD
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