Norway – tax cuts in the state budget for 2015
In the recent 2015 Budget announcement, the Conservative Coalition Government proposed several tax cuts, as well as a few increases. The reduction in the net wealth tax is the most significant change for resident individuals and foreign individuals owning real estate situated in Norway. The Government also proposed cuts to tax on earned income and employees´ social security contributions and changes to the VAT-system.
- The net wealth tax rate will be reduced from 1% to 0.75% and the threshold for the payment of net wealth tax will be increased from NOK 1 million to NOK 1.2 million.
- The tax value of commercial real estate and residential buildings other than the taxpayer´s own home will be increased from 60% to 80% of assessed market value.
- The social security charge on earned income will reduce from 8.2% to 8.1% and on private business income from 11.4% to 11.3%.
- Income levels for the highest tax rate will be increased, providing the following combined rates:
0 – NOK 552,300
NOK 552,300 – NOK 885,600
Over NOK 885,600
39% (47.1% / 50.3% incl social security)
- The minimum threshold for tax deductions on earned income will be increased to NOK 50,000.
- Minimum revenue levels for VAT registration will be increased from NOK 50,000 to NOK 150,000 and the rules for refund of VAT incurred prior to registration will be simplified.
- Imported goods purchased online will be exempt from VAT up to the value of NOK 500 (the current limit is (NOK 200).
A new tax appeal system will be introduced in 2015, which will have a single, centralized board of appeals with increased competence and independence from the tax offices.
New rules for exit taxation mean that any assets leaving Norwegian tax jurisdiction will immediately be liable for capital gains tax. Any capital gain above specified thresholds will be subject to tax at 27%, with the tax payable in equal instalments over a period of seven years.
The tax incentive scheme for R&D (”Skatefunn”) is to be broadened. The scheme allows for a tax refund on up 20 % of all R&D expenditure on pre-qualified projects. Under the proposed Budget changes, the maximum qualifying expenditure will increase from NOK 22 million to NOK 33 million.
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