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State budget 2017: Suggested changes in personal taxation

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The suggested state budget for 2017 was presented today. In the following we present the suggested changes related personal taxation. In short, the suggested changes include reduced tax rates on net income, increase of bracket tax rates (levied on gross employment, self employment and pension income), a higher effective tax rate on share income, new rules for personal share investments, in addition to a few minor adjustments.

Rates and thresholds

  • The tax rate on net income is suggested reduced from 25 % to 24 %
  • The adjustment factor, applied to the tax base of dividends, distributions from partnerships, and capital gains from disposal of shares before applying the tax rate, is suggested increased from 1,15 to 1,24. This implies an increase in the effective tax rate for dividends etc. from 28,75 % to 29,76 %.
  • The bracket tax rate (levied on gross employment, self employment and pension income) is suggested increased as follows:
Threshold   Tax rate 2017   Tax rate 2016
Below 164 100   0   0
NOK 164 100 - 230 950   0,93 %    0,44 %
NOK 230 950 - 580 650   2,41 %    1,7 %
NOK 580 650 - 934 050   11,52 %    10,7 %
NOK 934 050 -     14,52 %   13,7 %
  • The result of the suggested changes in the tax rates implies slightly lower marginal tax rates, as follows:
    2017   2016
Salary   46,7 %   46,9 %
Pension   43,6 %   43,8 %
Self-employment income   49,9 %    50,1 %

The suggested changes will if passed be in force from 1 January 2017.

Deductions

  • It is suggested to increase the minimum deduction (minstefradrag) from 43 % to 44 %, with a maximum amount of NOK 94 750 for employment income and NOK 75 000 for pension income.
  • The personal allowance deduction (personfradrag) is suggested changed from NOK 51 750 in tax class 1 and NOK 76 250 in tax class 2 (2016) to NOK 53 150 in tax class 1 and NOK 78 300 in tax class 2 (2017)
  • The rates for deduction of travels to work is increased with NOK 0,06 per kilometer to:
      • NOK 1,56 per kilometer up to 50 000 kilometer travel distance, and
      • NOK 0,76 per kilometer up to 75 000 kilometer travel distance
      • The threshold of NOK 22 000 remain unchanged

The suggested changes will if passed be in force from 1 January 2017.

Wealth tax

  • The tax rate for wealth taxation is suggested unchanged at 0,85 % and the lower threshold for wealth taxation is suggested increased from NOK 1 400 000 to NOK 1 480 000 (from NOK 2 800 000 to NOK 2 960 000 for married couples).
  • It is suggested that the tax base for wealth tax on shares owned by personal shareholders and working capital should be set to 90 % of their fair market value for 2017 and 80 % of their fair market value for 2018.

The suggested changes will if passed be in force from 1 January 2017.

Share saving account

It is suggested that personal taxpayers should be able to create a share savings account to be able to reinvest gross proceeds (pre tax) in new shares. The suggested model is somewhat similar to the participation exemption method for corporate shareholders, however simplified. The rules is suggested only to apply for investments in listed shares and parts in mutual share funds. Gains on sale of such investments shall then not be taxed until the money is distributed from the share saving account. A shielding deduction model will be introduced as well to aline the rules to the current rules for individual shareholdings. Dividends from shareholdings will be taxed upon distribution.

Other

  • A tax free amount of maximum NOK 1 500 is currently available if certain conditions are fulfilled when employees are offered to purchase shares in the employing entity cf. the tax act § 5-14. It is suggested that the tax free amount is increased from NOK 1 500 to NOK 3 000.  
  • It is suggested a general tax exemption for the covering of expenses for employee representative’s exercise of labour union duties, by the employer. The exemption is provided that the cost that is covered by the employer is sufficiently attached to the duty as an employee representative. The cost coverage will be deductible for the employer and it shall not be subject to employer’s social security contributions.
  • The Ministry of Finance has asked the Tax Directorate to prepare a discussion note concerning suggestions to improve the legislation regarding taxation of payments in kind, to be released this fall.

 

Torbjørn Sven Stokke

Torbjørn Sven Stokke

Jeg heter Torbjørn Stokke og jobber som advokat i Advokatfirmaet PwC. Jeg jobber med de fleste spørsmål som dukker opp i forbindelse med internasjonal mobilitet av arbeidskraft. Det er likevel ikke til å komme bort fra at jeg engasjerer meg aller mest i internasjonal personbeskatning. Jeg har også en god del erfaring innenfor nasjonal personbeskatning og kan være en god diskusjonspartner også her.

Jeg startet min arbeidskarriere med personbeskatning i Skattedirektoratet. Senere har jeg fått erfaring fra to andre revisjons- og rådgivningsfirmaer samt som intern skatterådgiver i Aibel, før jeg fant veien til PwC.

Enkelte ganger så dukker det opp spørsmål, nye lovregler, endret praktisering, rettssaker eller enkeltvedtak som virkelig engasjerer. Når jeg blir engasjert så har jeg et formidlingsbehov. Du kan være trygg på at kommer det et blogginnlegg fra meg, så står det en engasjert skatteadvokat bak!

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