Moving to Norway – What About Taxes?

Have you recently moved to Norway or are you planning to move here? Understanding how Norwegian tax system will affect you can be challenging, but we are here to guide you through the process.

Since every country has its own tax rules, it can be very complicated to understand the regulations in a new country. It is also important to get an overview of your tax obligations in Norway before moving here, so you can prepare for the consequences this may have.

Many people have specific questions about when and how they become tax residents in Norway, how to handle social security contributions, rules for reporting their move to Norway, and other important issues that arise when relocating to a new country. In this article, we aim to provide you with a brief insight into what tax residency in Norway means for your taxes. You will find information on how to contact us for advice at the end of the article.

‍

Tax Residency in Norway – What Does It Mean for You?

In Norway, if you become a tax resident, you are required to report all income received from other countries for Norwegian taxation. What is often new for most foreigners is that Norway taxes your total wealth in addition to your income. The reporting obligation as a tax resident in Norway therefore applies to all income from Norway and other countries, as well as assets you own in Norway and abroad.

‍

Wealth Tax – What Do You Need to Know?

The wealth tax can be surprisingly harsh if you are unprepared. Your net wealth is the basis for wealth tax, minus a tax-free allowance that may change slightly each year. Net wealth is the total value of what you own, such as property, bank accounts, shares, and investment accounts, at the end of each year, minus the value of all your debts at the same time.

Spouses, if both are tax residents in Norway, are taxed jointly for their combined net wealth.

‍

Foreign Pension Funds

Since every country has its own tax rules, Norway does not recognize other countries' definitions of financial instruments. Norwegian tax rules determine how your investments are classified and taxed.

A good example is pension funds in countries outside the EU/EEA, with deferred taxation until withdrawal. Funds in such accounts are often available to you at any time, but you pay higher taxes if you choose to withdraw the funds before reaching a certain age.

Norway often does not recognize such pension funds as "pensions" with deferred taxation, and the result may be that you are taxed annually in Norway for all returns received within the fund. Additionally, the value of the fund is included in the basis for wealth tax each year.

In many countries, it is common for employers to establish these funds for their employees, such as IRA (Individual Retirement Account) and 401k in the USA. These accounts are taxed in entirely different ways in the USA and Norway, so it is important to clarify this early to ensure you provide correct information to Norwegian tax authorities.

‍

Double Taxation and double taxation agreements (tax treaties)

Even if you become a tax resident in Norway, you may still also be a tax resident in the country you are coming from. This often means that both countries can tax the same income. Norway has entered into tax treaties with many countries, one of the main purposes of which is to prevent double taxation of the same income in the same tax year.

Tax treaties take precedence over domestic tax rules if double taxation occurs. Additionally, one of the countries may have waived the right to tax certain income and assets, which they would otherwise have the right to under their own tax laws.

‍

Norwegian tax return

Norway's tax return system is fully digital and straightforward, allowing you to easily update or correct any mistakes within certain time limits. If you have not reported all your income and assets in previous tax returns, it is important to correct this yourself before the tax authorities discover the missing information. This way, you can avoid being subject to penalty tax.

‍

How Can We Help You?

It can be wise to get a specific assessment of the consequences of moving to Norway with a tax advisor.

Værnes Advokatfirma has many years of experience in international and national tax law from both Norwegian tax authorities and law firms. If you have questions about the consequences for your private taxation, we can offer a review with you in a digital and confidential meeting. We guide you on what Norwegian tax rules and tax treaties with other countries mean for you, assist you with tax cards and filing your tax return, as well as specific cases you may have with Norwegian tax authorities.

Contact us today for a confidential consultation to understand how Norwegian tax rules apply to you. We are here to make your transition to Norway as smooth as possible.

‍

‍