Tax exodus: Norway's super-rich fleeing country as govt tightens tax noose

Norway’s proposed crackdown on its wealthiest citizens is sparking significant backlash from entrepreneurs. The Labour-led government is poised to broaden the exit tax on capital gains, a measure designed to address the growing number of billionaires relocating to Switzerland to evade higher taxes.

The proposal, unveiled in March and set for parliamentary discussion later this year, seeks to tighten the tax regulations to prevent capital flight. Entrepreneurs argue that this move could further entrench Norway’s economic reliance on its dominant oil and gas sector. Critics of the plan believe it will drive more wealthy individuals to leave Norway, potentially stripping the country of significant private investment and entrepreneurial talent.

Norway’s government, however, sees the measure as a necessary step to ensure tax equity and to close loopholes that allow the wealthy to avoid their fair share of taxes. The debate continues as both sides weigh the potential economic impacts of the proposed tax reforms.

While aimed at the country’s wealthiest individuals, the potential impact is alarming a broader array of entrepreneurs and businesspeople, including startup chiefs such as Marit Rodevand, whose company, Strise AS, makes software to combat money laundering, Bloomberg reported.

Norway is a very state-controlled oil-and-gas economy,” she was quoted by Bloomberg as saying in an interview at her office in central Oslo. “We need new industries. The politicians should step back and think: this tax doesn’t make us competitive on the global scene.”

Norway is witnessing a significant exodus of its super-rich, driven by a hike in wealth taxes introduced by the center-left government. In 2022, over 30 Norwegian billionaires and multimillionaires relocated to low-tax countries, particularly Switzerland. This number exceeds the total of such high-net-worth individuals who left Norway over the previous 13 years combined, according to Dagens Næringsliv news paper.

The surge in departures comes in response to the government’s decision to increase the wealth tax to 1.1%. The tax hike, implemented in November, is expected to drive even more wealthy individuals to leave Norway in 2023. This migration of the affluent is projected to cost the government tens of millions in lost tax revenue.

Switzerland, with its significantly lower tax rates, has become a preferred destination for these affluent Norwegians. This trend highlights a broader issue as Norway grapples with balancing equitable tax policies while retaining its economic elite.