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    Norway’s Wealth Tax Exodus

    Norway’s wealth tax exodus – Introduction

    Norway has seen a rise in the number of its billionaires leaving the country, in response to increased taxes.

    The Norwegian government has implemented stricter rules for taxing its citizens, including the abolition of the five-year period for exit taxation of unrealized gains on shares and other assets.

    This means that any gains on assets such as shares will be taxed immediately upon transfer or sale, rather than being taxed over a five-year period.

    Additionally, the rules will be extended to include transfers of shares to close family members living abroad.

    What has caused this exodus?

    As a result, many of Norway’s wealthiest individuals, whose net worth exceeds 1 billion Norwegian kroner (approximately 100 million euros), have reportedly relocated to countries such as Switzerland.

    One of the main reasons for this trend is the significant difference in tax rates between Norway and other countries.

    According to an analysis by the Heritage Foundation, the top tax rate in Norway is 47.8%, while the country’s total tax burden is 39.9% of total domestic income.

    In comparison, Switzerland has a top income tax rate of only between approx. 25% to 40%, and its total tax burden is 28.8% of total domestic income.

    Moreover, corporate profits are taxed at 28% in Norway, and dividends are taxed again at 28% income tax rate, leading to a de facto tax of 48.16% on company profits.

    In contrast, Switzerland has lower profit taxes (between approx. 12% and 20%), lower income taxes (dividend privilege; between approx. 13% and 30%), lower wealth tax (0.1% to just under 1%), and certain cantons have regulations defining the maximum tax burden to prevent confiscatory taxation in special cases (especially in the case of large non-income-producing assets).

    What’s so good about Switzerland?

    The Swiss tax system is generally considered advantageous for high-net-worth individuals compared to other countries for several reasons.

    First, Switzerland’s federal, cantonal, and municipal tax system allows for relatively low tax rates, especially for high-income earners.

    In addition, Switzerland has favorable tax treatment for certain types of income, such as dividends and capital gains.

    Dividends from significant shareholdings (10% or more) held as part of an individual’s private assets are subject to preferential taxation.

    Capital gains from the sale of private assets are generally tax-free, with an exception on capital gains on Swiss real estate, which are taxed under a special regime.

    The Swiss tax system is also decentralized, with each canton having the power to set its own tax rates, leading to a high degree of tax competition between the cantons. This can result in lower overall tax rates for individuals and companies.

    Additionally, Switzerland has strict banking secrecy laws that provide wealthy individuals with a high degree of privacy and discretion in their financial affairs, and an extensive network of double taxation treaties that help avoid or significantly reduce double taxation and foreign withholding taxes on dividends.

    Switzerland is also known for its high standard of living, excellent infrastructure, and high-quality health and education systems, making it an attractive location for wealthy individuals seeking a stable and prosperous environment.

    Norway’s Wealth Tax Exodus – Conclusion

    In conclusion, the increase in taxes in Norway has led to a rise in the number of billionaires leaving the country.

    Switzerland has become a popular destination due to its advantageous tax system, which allows for relatively low tax rates, tax competition between cantons, strict banking secrecy laws, an extensive network of double taxation treaties, and a stable and prosperous environment.

    If you have any queries about this article on Norway’s Wealth Tax Exodus, or Norwegian tax matters in general, then please get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Spanish Net Wealth Tax & Solidarity Wealth Tax for non-Spanish residents

    Introduction

    Several weeks ago, we commented on the Spanish Government’s recently proposal to introduce a Solidarity Wealth Tax.

    However, this article considers new wealth tax proposals – in respect of the Net Wealth Tax and the Solidarity Wealth Tax – for non-Spanish-tax-resident individuals who hold Spanish real estate through one or multiple non-Spanish-resident entities.

    What is the proposal?

    It is envisaged that non-Spanish-tax-resident individuals would be subject to the Net Wealth Tax (“NWT”) when they hold shares in an unlisted entity. This would be where “at least 50% of its assets are directly or indirectly made up of real estate located in Spain”.

    These new proposals would replace the current domestic provisions which historically have required non-resident individuals to pay NWT in circumstances where they directly own real estate only.

    Additionally, the Spanish Government plans to bring in the Solidarity Tax (“ST”) to supplement the regional NWT. The ST will be calculated and assessed at the federal level.

    The ST will be levied on non-Spanish-tax-resident individuals with a net wealth in Spain of at least EUR 3 million. It should be noted that this will include any interests in non-resident entities that own Spanish real estate

    The NWT can be credited against any ST liability.

    Commencement of new Spanish Net Wealth Tax and Solidarity Wealth Tax

    It is expected that these measures will be passed before the end of 2022.

    If the new legislation is published prior to the end of 2022, then both would apply to indirect holdings of Spanish real estate held on 31 December 2022.

    It is currently expected that both would have to be paid in June or July of the following year.

    If you have any queries about the Spanish Net Wealth Tax or Solidarity Wealth Tax, or Spanish tax matters in general, then please do get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.