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Prepared by Sylwia Nowak (EUR).
All expenses incurred for the purpose of earning income are deductible. Taxpayers may choose to claim a minimum deduction of NOK 84,150 (about US$14,000) rather than claiming itemized expenses.
Taxpayers in the extreme northeastern parts of Norway (Finnmark and Nord-Troms regions) enjoy reduced tax rates of 23.5, 30.5, and 42.5 percent.
The average income tax rate for an average single worker without children was 21.4 percent in 2013. Personal incomes at 167 percent of average earnings were taxed 27.8 percent.
The OECD (2012b) estimates that the richest 10 percent of Norwegian households pay 70 percent of all tax revenue from capital income.
Income from self-employment other than fishing, hunting, and child care is subject to employee’s contribution of 11.4 percent of gross labor income.
New European Economic Area regulations on regional state aid, effective from July 1, 2014, may necessitate changes to the system of regionally differentiated employer’s social security contributions.
The threshold is for single taxpayers. For married couples who are assessed together for joint assets, the threshold is NOK 2 million (about US$ 333,300).
The wealth tax rate is 1 percent on the capital stock in excess of NOK 1 million. However, only 25 percent of the value of owner-occupied housing is included in the tax base, which implies an effective tax rate of 0.25 percent. Rental housing also gets a favorable treatment: only 40 percent of the property value is included in the tax base, which implies an effective tax rate of 0.4 percent.
Detailed treatment of the oil and gas taxation is largely outside this analysis.
The VAT revenue ratio is defined as the ratio of VAT revenue to final consumption, divided by the standard tax rate. It measures the difference between the VAT revenue actually collected and potentially possible if VAT was applied at the standard rate to the entire tax base.
The sum of general government forgone revenue in the form of exemptions, allowances, credits, preferential tax rates, and so on. The actual number is higher, as there are several tax expenditures that are not calculated due to technical difficulties. All existing tax expenditures are reported in the National Budget.
The cadastral value refers to the valuation of a property in a public register used for taxation purposes.
An existing tax credit for pension income was adjusted so that the minimum pension remained tax free.
The interest expense limit is triggered if the company claims interest expenses with respect to borrowings from both related and unrelated parties of more than NOK 5 million (about US$ 0.83 million). If the interest expense exceeds this threshold amount, the limitation applies to all intra-group interest expenditure (i.e., the entire amount is limited). Third-party loans guaranteed by a group company are considered as intra-group loans, and thus subject to the new legislation.
Initial depreciation rules for machinery, cars, and other operating equipment were increased from 20 percent to 30 percent in the year of purchase. The depreciation rate will remain at 20 percent in the following years.
The net wealth taxation of primary residences remained unchanged.