Income tax in Norway
Taxation Researcher | November 05, 2020
Residents are taxed on their worldwide income. An individual is deemed to be a resident if he spends more than 183 days in Norway in a 12-month period or more than 270 days during any 36-month period. Married persons are generally taxed jointly. They may, however, be taxed separately if the resulting tax liability is lower.
Resident taxpayers are taxable on almost all kinds of income: (1) employment income or salaries, (2) dividends, interest, and royalties, (3) income from real property and other capital, (4) industrial, commercial and agricultural profits, (5) shares of partnership net income, whether or not withdrawn from the partnership, and (6) other income. Some expenses incurred in earning certain income may be deductible for income tax purposes.
There are three classes of taxpayers in Norway:
- Class 0 - taxpayers with limited tax liability and are not residents of Norway
- Class 1 - unmarried residents and married residents electing for separate taxation
- Class 2 - married residents electing for joint taxation and one-parent families
Income tax is levied at a flat rate of 24%. This tax rate is composed of the state tax rate, levied at 12.2%, and the county and municipal tax rate, which is at 15.8%.
Surtax on Personal Income
Aside from the state and county/municipal taxes, residents are also liable to pay a surtax levied on personal income. This surtax is progressive.
SURTAX ON PERSONAL INCOME 2020
|TAXABLEINCOME, NOK||TAX RATE|
|Up to 180,800 (€18,080)||0%|
|180,800 – 254,500 (€25,450)||1.90%|
|254,500 – 639,750 (€63,975)||4.20%|
|639,750 – 999,550 (€99,975)||13.20%|
|Over 999,550 (€99,975)||16.20%|
SURTAX ON PERSONAL INCOME 2019
|TAXABLEINCOME, NOK||TAX RATE|
|Up to 174,000 (€17,400)||0%|
|174,000 – 245,650 (€24,565)||1.90%|
|245,650 – 617,500 (€61,750)||4.20%|
|617,500 – 964,800 (€96,480)||13.20%|
|Over 964,800 (€96,480)||16.20%|
Rental income is taxed at the standard income tax rate of 22%. Income-generating expenses are deductible.
Capital gains are taxed as ordinary income, at 22%. Taxable capital gains are generally computed as the selling price, less acquisition costs, related expenses and depreciation.
Gains from the sale of a taxpayer´s private residence are not taxable, provided that the taxpayer has owned the dwelling for more than 1 year, and lived there for at least 1 year within the 2-year period prior to disposal.
Holiday houses are also exempt from capital gains tax if the taxpayer has owned them for more than 5 years and has used the property for at least 5 years in the 8-year period prior to selling the property.
A wealth tax is imposed on real estate property, at the national and municipal level. The tax is levied on the estimated market value of the property. The national net wealth tax is levied at a flat rate of 0.85%.
The tax is levied only on net wealth exceeding a certain threshold. For year 2017, the threshold is NOK1,480,000 (€148,000).For year 2016, the threshold is NOK1,400,000 (€140,000). For year 2015, the threshold is NOK1,200,000 (€120,000). For year 2014, the threshold is NOK1 million (€100,000).
Municipalities in Norway are entitled to impose a tax on real estate property located in their jurisdiction. The tax is levied at the assessed value of the property, which is about 20% to 50% of the property´s market value. Property tax rates range from 0.2% to 0.7%, depending on the municipality.
The real estate tax is deductible for income tax purposes if the property is used for business.