Individual - Significant developments

Last reviewed - 15 August 2022

From 2019, non-resident taxpayers may, on election, be subject to a flat 25% tax rate in accordance with the pay-as-you-earn (PAYE) system.

After eight year in office, the previous government was replaced with a new government during autumn 2021. This new government has generally increased taxes on higher income and capital gains from sale of shares and dividends.

On Monday 9 May 2022, the Ministry of Finance sent out proposals for special rules for private consumption in companies. The consultation deadline is set for 1 August 2022 and the planned entry into force is from and including the income year 2023. When the owner disposes of the company's assets in accordance with current rules, the owner shall be taxed on dividends and the company pay withholding tax. However, the Tax Administration claims that significant amounts that should have been taxed are not reported, and that it is resource-intensive to uncover the extent of this. The purpose of the consultation proposal is to reduce the possibilities for unfairly favorable taxation, and simplify the evidence assessments for the Tax Administration.

The rules are proposed to cover personal taxpayers who at some point during the income year, directly or indirectly, have owned or controlled the company by at least 50%. Companies covered are limited companies, etc. and corresponding foreign companies. It is proposed that the ownership and control share of related parties be merged in the assessment of the 50% requirement. The proposal includes assets of high value that are suitable for private use, ie residential property, leisure property, boat, plane and helicopter.

The proposed rules are intended to function as stop rules for private consumption in companies. The tax advantage for the owner and the company is therefore proposed to be determined according to high standard rates. For residential and leisure property, the taxable benefit shall be set at 26% of the calculation basis per year, and the calculation basis is the highest amount of turnover value and acquisition value plus costs. For boats, aircraft and helicopters, the taxable benefit shall amount to 104% of the calculation basis per year, and the calculation basis is acquisition cost plus costs.