The intention is that the majority of the proposals will be effective as from the income year 2014. However, due to the recent election, a new conservative government will be announced later this week. The new government will propose amendments to the below mentioned proposals and/or other changes to the tax law.
Visma Advokater AS is a full-range Norwegian law firm focusing on corporate and tax law. Below we summarize on the most important proposed changes to the Norwegian tax legislation:
Corporate tax rates
The corporate tax rate will decrease from 28 to 27 per cent.
Self-employed persons will have the advantage of a social security reduction of 0.72 percentage points.
Individual partners in partnerships will get their efficient tax rate reduced by one percentage point.
The additional tax for petroleum companies and hydropower companies will increase by one percentage point to 51 per cent and 31 per cent respectively.
An additional depreciation allowance of 10 per cent will be applicable to first year investment costs in connection with machinery, cars, equipment and similar. This implies an increased initial depreciation rate from 20 to 30 per cent.
Tax credit scheme for R&D
The R&D tax credit scheme (“SkatteFUNN”) implies a tax credit (or a refund) of either 20% (small and medium-sized businesses) or 18% up to a maximum limit of qualifying R&D costs.
The maximum limit of qualifying R&D costs will increase from NOK 11,000,000 to 22,000,000, i.e the maximum R&D credit will be NOK 4,400,000 or 3,960,000.
Limitations to the deductibility of interest costs paid to related parties
Interest payments made to related parties will be cut off to the extent internal and external interest costs in total exceed 30 per cent of the EBITDA as computed for tax purposes. The rule will apply to limited companies, partnerships, limited partnerships and taxable branches of foreign companies. The limitation rule will apply only if the total of internal and external interest costs exceeds NOK 3,000,000.
Non-deductible interest expense may be carried forward for ten consecutive years.
Simplification of the tax rules applicable to debentures
The Norwegian tax treatment of debentures will be simplified in order to make the Norwegian bond market more aligned with the global market and more feasible to stakeholders.
The fixed interest part of the yield on debentures shall follow the realization principle for tax purposes. This implies a cease of the differentiated tax treatment between the coupon (consecutive taxation) and value changes related to market conditions. The issuer of a discount bond will then be taxed upon redemption.
The minimum basic allowance (“minstefradraget”) will increase from 40 per cent to 42 per cent of income from employment. The maximum allowance will, however, be NOK 84,150.
The basic allowance for wealth tax will increase from NOK 870,000 to 1,000,000.
The wealth tax valuation basis for corporate real estate and secondary real estate will increase from 50 to 60 per cent of calculated market value. The wealth tax valuation basis for vacation homes will increase by 10 per cent.
Norwegian tax residents owning real estate in any EEA country will be granted the same debt and interest deductibility as if the real estate had been situated in Norway.
The basic allowance for inheritance tax will increase from NOK 470,000 to 1,000,000.
The inheritance tax rate will be 10 per cent of inheritance and gifts to children and parents and 15 per cent of inheritance and gifts (when applicable) to others.
The “discount” on the valuation basis for unlisted stocks will decrease from 40 per cent to 30 per cent.
Capital gains tax on the sale of homes
New rules will apply to the capital gain on the sale of homes. The capital gain will be calculated based on the proportion between the period during which the seller has used it as his/her home, and the period during which he/she has owned the home.
A trading entity registered in Norway or a Norwegian or public authority buying gold will be obliged to calculate and pay the applicable VAT. If the buyer is a private person, the calculation and payment of VAT will still be the seller’s responsibility.
Oslo, 14 October 2013
Visma Advokater AS