Key highlights – Norway National Budget proposal 2023
This article presents an overview of the key changes in the National Budget proposal released 6th of October 2022.
Increased Employer’s National Insurance contributions – proposal
A 5 % additional employer’s national insurance contribution is proposed to be levied on employment income in excess of NOK 750 000. The ordinary rates will apply up to NOK 750 000 and the additional levy will be imposed on income in excess.
Employers with relatively high paid employees, including foreign employers with employees covered under Norwegian National Insurance scheme will, as a result incur increased labour costs.
Personal income tax- proposal
Minor adjustments in the two lower thresholds of the bracket tax, and a reduction of the employees’ national insurance contribution rate is proposed.
The marginal tax rate remains at 47,4%.
The favorable treatment of taxable benefit for private use of employer provided electrical cars is removed. Taxable benefit for electrical cars will follow the general taxation rules for company cars.
Dividends and capital gains tax – proposal
The effective tax rate on dividends and capital gains from sale of shares is to increase from 35,2% to 37,84%. To avoid tax motivated transactions, the increase should take effect as of 6 October 2022.
Wealth tax – proposal
The tax free amount for wealth tax of NOK 1, 7 million remains unchanged.
The valuation discount for shares and mutual funds is reduced from 25% to 20%.
The tax rate for net wealth in excess of NOK 1,7 million and less than NOK 20 million is proposed to increase to 1%, while the tax rate on net wealth over NOK 20 million should remain unchanged at 1,1% of net wealth.
With no increase of the tax free amount, and a reduced valuation rebate for shares, more tax payers must expect to pay wealth tax.
- Here is a proposed tightening of the resource rent tax on hydropower, in addition to a new resource rent tax on aquaculture and land based wind power. These are likely to be introduced from 2023.
- The previously proposed legal basis for taxation of income earned by foreign employees and employers involved in activities related to renewable energy production, mineral activities and carbon capture and storage on the Norwegian continental shelf is not expected to take effect until 2024, at the earliest.
- The introduction of a special taxation of private consumption in companies, also referred to as a monster tax , is delayed as it needs further review.