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This is an archived release.
NOK 2.2 billion in tax-free share income
Individuals residing in Norway received almost NOK 30 billion in income from investments in shares in 2007. Of this, NOK 2.2 billion was tax-free.
Tax-free dividends amounted to NOK 2.1 billion and tax-free capital gains on sale of shares amounted to NOK 171 million.
NOK 15 billion in dividends and NOK 14.7 billion in capital gains on sale of shares
In total, individual shareholders received NOK 15 billion in dividends from Norwegian limited companies and primary capital certificates. The deductible risk-free return amounted to a little less than 14 per cent of the dividends, and NOK 12.9 billion was thereby taxable. For shareholders who received less than NOK 50 000 in total dividends, the deductible risk-free return amounted to an average of one third of the dividend. On the other hand, for shareholders who received NOK 500 000 or more in total dividends, the deduction only amounted to one tenth of the dividend.
In addition to dividends, the individual shareholders had capital gains on sale of shares of NOK 14.7 billion. When a shareholder sells shares, he or she can reduce the taxable capital gains with unused deductible risk-free return from previous years. The deductible risk-free return shall first be used to reduce taxable dividends and then the remainder can be used to reduce taxable capital gains on sales. In 2007, the part of the deduction used on capital gains amounted to NOK 171 million or just slightly more than 1 per cent of the total capital gains. Thus, the taxable capital gains on sale of shares amounted to NOK 14.5 billion.
NOK 11.2 billion in latent tax-free income from shares
The individual shareholders in Norwegian limited companies have a large amount of unused deductible risk-free returns that are carried forward to later years. At the end of 2007, the unused risk-free return amounted to NOK 11.2 billion. This unused deduction can be used to reduce the tax on future dividends and capital gains on sale of shares. In addition, the unused deduction will increase next year’s basis for calculating the risk-free return, and thereby lead to an even larger future tax-free income.
Large capital gains from equity funds
In 2007, individuals residing in Norway also received large capital gains on sale of shares in Norwegian equity funds. In total, the capital gains were NOK 5.1 billion, from which the deductible risk-free return amounted to NOK 221 million. Taxable capital gains were therefore NOK 4.9 billion.
Taxation of shares and equity fund sharesAs of fiscal year 2006, new rules for the taxation of individual shareholders were introduced. These rules apply to individual shareholders with income from limited companies, primary capital certificates, equity funds etc. According to the rules, taxable dividends and capital gains on sale of shares can be reduced by a deductible risk-free return. All returns exceeding the deductible risk-free return are taxed at 28 per cent. The basis for calculating the deductible risk-free return is the historical cost price of the share. The deductible risk-free return amounts to a percentage share of this cost price. The percentage share is calculated by The Directorate of Taxes and was 3.3 per cent in 2007. The individual that owned the share as of 31 December is entitled to the deductible risk-free return. In addition to the said rules, rules have also been introduced that apply to loans between a shareholder and a limited company. These rules have been introduced to reduce the possibility of receiving other tax-free income from the limited company. |
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Contact
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Hieu Minh Tran
E-mail: hieu.tran@ssb.no
tel.: (+47) 46 67 66 50
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Richard Solem
E-mail: richard.solem@ssb.no
tel.: (+47) 40 81 14 07