A record number of super-rich Norwegians are abandoning Norway for low-tax countries after the centre-left government increased wealth taxes to 1.1%.
More than 30 Norwegian billionaires and multimillionaires left Norway in 2022, according to research by the newspaper Dagens Naeringsliv. This was more than the total number of super-rich people who left the country during the previous 13 years, it added. Even more super-rich individuals are expected to leave this year because of the increase in wealth tax in November, costing the government tens of millions in lost tax receipts.
Many have moved to Switzerland, where taxes are much lower. They include billionaire fisher turned industrial tycoon Kjell Inge Røkke who moved to the Italian-speaking city of Lugano, just over the border from his favoured hangout Lake Como and the fashion capital Milan.
Røkke, 64, is the fourth-richest Norwegian, with an estimated fortune of about NOK 19.6bn (£1.5bn). In an open letter, he said: “I’ve chosen Lugano as my new residence – it is neither the cheapest nor has the lowest taxes – but in return, it is a great place with a central location in Europe … For those close to the company and to me, I am just a click away.”
His relocation will cost Norway about NOK 175m in lost tax revenue a year. Last year, Røkke was the country’s highest taxed individual. Dagens Næringsliv calculated that he has paid about NOK 1.5bn in tax since 2008.
His move to Switzerland follows a relatively small increase in tax aimed at the country’s super-rich, who face wealth taxes at both the local and state level. That includes a municipal tax of 0.7% on assets in excess of NOK 1.7m for individuals, or NOK 3.4m for couples. There is also a state wealth tax rate of 0.3% on assets above NOK 1.7m. In November, the government raised the state rate to 0.4% for assets above NOK 20m for individuals, and NOK 40m couples, taking the maximum wealth tax rate to 1.1%.
Ole Gjems-Onstad, a professor emeritus at the Norwegian Business School, said he estimated that those who had left the country had a combined fortune of at least NOK 600bn.
“In my opinion it is a little bit like Brexit. Norway has no great tradition of self-harm, and the flood of entrepreneurs moving abroad has come as something of a shock,” Gjems-Onstad, said. “Some politicians are, as you know, blaming the wealthy people moving, but I think many ordinary people quite simply do not like that our best investors are leaving.”
Tord Ueland Kolstad, a retail estate and Salmon farming investor, with a fortune of about NOK 1.5bn, has moved from Bodø in northern Noway to Lucerne in Switzerland. “This was not what I wanted, but the toughened and increased tax rules of the current government means that I, as the founder and responsible owner, have no choice,” he told the Norwegian broadcaster TV 2.
Kolstad said the increase in the wealth tax meant he would pay just over NOK 6m, which he complained would mean he would need to pay himself a dividend of NOK 10m to take into account increased dividend tax.
“This is unfortunately the reality of today’s tax policy. It is unjustifiable to impose such costs on the company when you want to create new jobs,” he said.
Kolstad told the Norwegian newspaper Aftenposten that when he first arrived in Switzerland he did not have any friends there. ”But now there are several of us [Norwergians], so we meet every now and then for coffee.”
Erlend Grimstad, a state secretary in the ministry of finance, told the Guardian he hoped wealthy Norwegians would return “in time”.
“If you have enjoyed success and become rich in Norway, we hope you will stay and continue taking part in the Norwegian society,” he said. “We do encourage Norwegians to succeed in creating value and become rich. And we believe the Norwegian model with a strong public welfare system and high education levels are important factors in making that success possible.
“The model in Norway is that everyone should contribute relevant to ability and therefore those that have a greater ability to pay taxes, should pay a little more.”
