Daily Management Review

The Super-Rich Are Avoiding Norway At A Historic Rate As Wealth Tax Increases A Little


The Super-Rich Are Avoiding Norway At A Historic Rate As Wealth Tax Increases A Little
After the center-left administration raised wealth taxes to 1.1%, a record number of extremely wealthy Norwegians are emigrating to low-tax nations.
According to data by the daily Dagens Naeringsliv, around 30 billionaires and multimillionaires from Norway left the country in 2022. It went on to say that this was higher than the total number of extremely wealthy people who had left the nation over the previous 13 years. Due to the increase in wealth tax in November, even more extremely wealthy people are anticipated to leave this year, costing the government tens of millions in lost tax revenue.
Since Switzerland has substantially lower taxes, many people have migrated there. They include Kjell Inge Rkke, a multibillionaire industrial entrepreneur who was formerly a fisherman and relocated to the Italian-speaking canton of Lugano to be near his favorite hangout Lake Como and the fashion hub Milan.
With a net worth of around NOK 19.6 billion, Rkke, 64, is the fourth richest Norwegian. "I've picked Lugano as my new residence," he wrote in an open letter. "It is not the cheapest nor has the lowest taxes, but in exchange, it is a fantastic destination with a central location in Europe. I am easily accessible to individuals who are close to the business and to me.
His relocation will result in a loss of tax revenue to Norway of roughly NOK 175m per year. Rkke paid the most taxes in the nation last year. As determined by Dagens Naeringsliv, he has paid around NOK 1.5 billion in taxes since 2008.
His relocation to Switzerland comes after a negligible tax rise targeted at the nation's super-rich, who are subject to wealth taxes on both a local and state level. This includes a municipal tax of 0.7% on assets worth more than NOK 1.7 million (or NOK 3.4 million for couples) for individuals. A state wealth tax of 0.3% is also levied on assets worth more over NOK 1.7 million.
The government increased the state rate to 0.4% in November for assets worth more than NOK 20 million for individuals and NOK 40 million for couples, bringing the top wealth tax rate to 1.1%.
Ole Gjems-Onstad, a retired professor at the Norwegian Business School, claimed to have calculated that the aggregate wealth of individuals who fled the nation was at least NOK 600 billion.
“In my opinion it is a little bit like Brexit. Norway has no great tradition of self-harm, and the flood of entrepreneurs moving abroad has come as something of a shock,” Gjems-Onstad, said. “Some politicians are, as you know, blaming the wealthy people moving, but I think many ordinary people quite simply do not like that our best investors are leaving.”
With an estimated net worth of NOK 1.5 billion, Tord Ueland Kolstad has relocated from Bod in northern Norway to Lucerne in Switzerland. He told the Norwegian channel TV 2, "This was not what I wanted, but the toughened and increased tax rules of the current government means that I, as the founder and responsible owner, have no choice."
Kolstad said that the higher wealth tax meant he would pay little over NOK 6 million, which would require him to pay himself a dividend of NOK 10 million to account for the higher dividend tax.
“This is unfortunately the reality of today’s tax policy. It is unjustifiable to impose such costs on the company when you want to create new jobs,” he said.
According to Kolstad, he had no acquaintances in Switzerland when he initially moved there, as reported by the Norwegian newspaper Aftenposten. However, there are now several of us [Norwegians], so we occasionally get together for coffee.
State secretary for the ministry of finance Erlend Grimstad expressed optimism that affluent Norwegians would return "in time" to the Guardian.
“If you have enjoyed success and become rich in Norway, we hope you will stay and continue taking part in the Norwegian society,” he said. “We do encourage Norwegians to succeed in creating value and become rich. And we believe the Norwegian model with a strong public welfare system and high education levels are important factors in making that success possible.
“The model in Norway is that everyone should contribute relevant to ability and therefore those that have a greater ability to pay taxes, should pay a little more.”