Norway clings to its super-rich tempted by exile

Boats moored at the Kongen marina in Oslo, July 25, 2020 in Norway (AFP/Archives/Odd ANDERSEN)

If you advance to square one, go through the tax authorities: Norway seeks to retain its super-rich, entrepreneurs or celebrities, tempted by the path of exile to reduce their tax bills.

Businessman Kjell Inge Røkke, former cross-country skiing legend Bjørn Daehlie, father of football ace Erling Braut Haaland… Dozens of big fortunes have left the Scandinavian country in recent years .

At issue: the increase in taxation by the center-left government which, since its arrival in 2021, has increased the wealth tax rate from 0.85% to 1% (1.1% for the most rich) and increased that on dividends.

“If your salary is one million and your taxes are three million, it is clear that it is untenable,” argues Tord Ueland Kolstad, real estate magnate, exiled “despite himself” since 2022 in Lucerne in Switzerland.

“The system is so designed that it confiscates more than you manage to produce,” adds the billionaire.

The Nordic kingdom is, with Spain and… Switzerland, the only country in Europe to levy a wealth tax, which also applies to unrealized capital gains (gains which have not yet been realized). by a sale).

To pay it, a Norwegian investor will thus be pushed to demand more dividends – themselves subject to a tax of 37.84% – than their foreign counterparts who are not subject to it.

“In fact, you only have two options: either leave Norway or sell your shares,” says Tord Ueland Kolstad.

– “Breaking of the social contract” –

Between 2021 and 2023, around a hundred wealthy Norwegians have chosen the former and taken the key to the fjords to settle down, in the vast majority of cases, in Switzerland.

Others transferred their assets to heirs who were themselves exiled, inheritances not being taxed in Norway.

Norwegian Prime Minister Jonas Gahr Støre, May 22, 2024 in Oslo

Norwegian Prime Minister Jonas Gahr Støre, May 22, 2024 in Oslo (NTB/AFP/Erik Flaaris Johansen)

A mini-exodus denounced by Labor Prime Minister Jonas Gahr Støre.

“When we got rich in Norway, put our children in school there, took advantage of its health system, drove on its roads and benefited from its research, I believe that leaving is a breach of the social contract,” he said in front of Parliament.

His government is now working on a tightening of the “exit tax”: candidates for departure would have up to 12 years to pay the exit tax – also at a rate of 37.84% – which it was until ‘then possible to circumvent or postpone.

“The objective is that the gains accumulated in Norway are actually taxed in Norway,” explains Erlend Grimstad, State Secretary at the Ministry of Finance.

“Our nurses and teachers have to pay a large portion of their income back to society in the form of taxes,” he says. “If they see that the wealthiest can simply avoid contributing by moving abroad, that undermines the legitimacy of the tax system.”

– Exit tax –

Not enough to quell the anger of the super-rich.

A business creator, Christer Dalsbøe, created a buzz on social networks by singing songs to dissuade entrepreneurs from setting up in the country.

“Don’t come to Norway, they will tax you there until you are poor,” he intones, sitting at the piano. “And when you have nothing left, we will tax you a little more.”

For the (liberal) think tank Civita, the planned tightening of the “exit tax” actually aims to put barriers in the way of exit for millionaires and billionaires.

“Instead of tackling the reasons for going into exile, namely the tax pressure on Norwegian shareholders, we seem to prefer to put in place regulatory obstacles,” said Mathilde Fasting, an economist at the think tank.

In Lucerne, Tord Ueland Kolstad says he receives “up to several calls every week” from compatriots who have come to test the situation in Switzerland.

“The flow has not dried up. It may just be beginning.”

© 2024 AFP

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