Ahead of Norway's general election, the attention of Europe's wealthy is focused on Oslo. The key issue is the wealth tax. With Norway considered one of the world's top welfare states, it remains to be seen whether it will maintain the 'wealth tax' or ease it, as political forces on the left and right clash directly. The outcome could impact tax strategies and residency choices for the rich across Europe.
On the 20th (local time), according to the Financial Times (FT), Norway imposes a wealth tax of 1-1.1% on all assets exceeding 1.76 million kroner (about 230 million won). While certain discounts apply to real estate and liabilities can offset assets, the burden remains substantial. The ruling Labor Party insists that 'the wealthy must contribute to maintaining the welfare state.' In contrast, the center-right parties, including the Conservative Party and the Progressive Party, are campaigning for reform, arguing that 'high tax rates are driving talent and capital abroad.' Erna Solberg, the leader of the Conservative Party, emphasized, 'Taxes, especially wealth taxes, are key issues dividing left and right.'
In fact, in recent years, there has been an 'escape rush' among wealthy Norwegians. Local bank DNB estimates that over 500 Norwegians with a minimum of 2 million Swiss francs (about 3.4 billion won) in assets have migrated to Switzerland. Gustav Magnar Witzøe, heir to the salmon farming company SalMar, is said to have assets worth about 30 billion kroner (about 4 trillion won) and paid over 300 million kroner in taxes last year alone.
He publicly lamented, 'Due to the property tax, entrepreneurs have to pay dividends to themselves to meet their tax obligations.' Since Norway's wealth tax is based on asset values, even entrepreneurs with no actual income must pay taxes. This means that some major shareholders are being pushed to force dividends in their owned companies to secure cash for tax payments.
The complaints of startup founders are even greater. Fredrik Haga, founder of a cryptocurrency data company, moved to Switzerland despite his company recording losses, having to pay taxes based on 'paper valuation.' He criticized, 'The Norwegian case shows how taxing unrealized gains can inflict significant self-harm.' Experts point out that such burdens lead to a contraction of the startup ecosystem. Indeed, after abolishing the wealth tax in 2007, Sweden emerged as a startup hub, while Norway is viewed as relatively lacking in innovative companies.
In Europe, discussions around wealth taxes are already spreading. Some members of the ruling Labor Party in the UK support the introduction of a wealth tax, while Switzerland is facing a referendum in November regarding the strengthening of inheritance taxes for the wealthiest citizens. Therefore, the outcome of Norway's general election is expected to have ripple effects across Europe, beyond just a tax reform in one country.
The backlash against wealth taxes is also evident in the footsteps of the wealthy across Europe. IKEA founder Ingvar Kamprad left Sweden in the 1970s in protest against the tax system and resided in Switzerland for 40 years, only returning after the taxation system was relaxed. Shipping magnate John Fredriksen also left Norway in 1978, moving through London and Cyprus before recently settling in the United Arab Emirates. He even remarked, 'The UK has fallen into hell, just like Norway.'
The outcome of this general election remains difficult to predict. The center-left bloc is gaining support by nominating star figure Jens Stoltenberg, the former NATO Secretary General and current Minister of Finance. He has suggested a comprehensive tax review, including the property tax, after the election. However, the center-right is also rallying support by promising a return of capital that has 'escaped Norway' by prioritizing the easing of wealth taxes.
Norway's welfare state model has been maintained on the basis of wealth redistribution, but concerns about sustainability are being raised due to the exodus of the wealthy and objections from the entrepreneurial class. As a result, this general election is seen as a test to gauge the balance between 'redistribution and attracting capital' across Europe, beyond merely a domestic tax reform.