Norway’s wealth tax
Norway is one of very few countries that still maintains an annual wealth tax, a levy on net assets rather than income. Currently set at 1% on net assets above 1.9 million Norwegian Krone (NOK), the tax applies to the global wealth of anyone tax-resident in Norway, regardless of where assets are held.
In 2022, Norway's Labour-led government raised the wealth tax to 1.1%, hoping to boost annual revenues by $146 million. Instead, it triggered a migration of the wealthy, not just of assets, but of people. Roughly 50 of Norway's richest citizens left, including high-profile investors and founders of tech firms, with Switzerland emerging as a favoured destination. The net result was a reported $594 million loss in tax revenue. The loss was four times the projected gain.
Individuals worth $54 billion left the country, leading to a lost $594 million in yearly wealth tax revenue, a net decrease of over $448 million. More than NOK 600 billion in assets left the country as high-net-worth individuals increasingly opted for tax havens over their homeland.
Why did they choose Switzerland? Norway's top income tax rate sits at 47.8%, while Switzerland's is roughly 25-40%, with a total tax burden of only 28.8% of domestic income compared to Norway's 39.9%. Switzerland also offers lower wealth taxes, one tenth of Norway’s, lower profit taxes; and certain cantons cap the maximum tax burden to prevent what they consider confiscatory taxation.
An interesting counterpoint emerged at the local level. Researchers studied an unprecedented municipal reform in the small northern Norwegian municipality of Bø, which unilaterally cut its local wealth tax rate from 0.85% to 0.35% in 2021. This produced a significant 60% increase in average taxable wealth in the municipality, driven largely by wealthy individuals relocating internally within Norway to take advantage of the lower rate.
Norway has also tightened how expensive homes are valued for wealth tax purposes. From 2023 onward, the taxable value of the portion of a primary residence worth more than NOK 10 million is assessed at 70% of market value, up from the old flat rate of 25%. This means the taxable value of high-end properties has almost tripled compared to the pre-2022 system.
The Norwegian experience has become a prominent reference point in international debates about wealth taxes, illustrating the tension between redistributive goals and the behavioural responses of mobile, high-net-worth individuals. Critics argue that it shows wealth taxes are self-defeating, whereas proponents counter that better international coordination could prevent capital flight and make such taxes workable.
Who knows? This might result from international agreements, but it would remove one of the key things that retrain rapacious governments: wealth and talent mobility.
Madsen Pirie
