Sitting in his lakeside villa in the Swiss city of Lucerne, Borger Borgenhaug misses his grandchildren and the scent of the Nordic sea on a clear summer night. The carpenter-turned-real estate developer says this is the price he must pay to escape Norway’s enhanced wealth tax, an annual levy that has pushed hundreds of millionaires to live abroad while supporting one of the world’s most egalitarian societies.
“The political climate in Norway has become increasingly hostile towards entrepreneurs,” Borgenhaug, who will leave office in 2022, tells Reuters.
With a wealth tax dating back to 1892 and a culture of transparency that allows citizens to look at other people’s tax returns, Norway has more experience than many in squeezing the rich. Their model offers lessons for countries debating similar measures, from Britain to France to Italy, or even a city like New York.
Bottom line: A wealth tax will scare off some millionaires, but if set broadly enough, the revenue can still be worth it.
On a net worth between 1.76 million and 20.7 million crowns (between 149 thousand and 1.75 million euros), taxpayers pay 1% and, from 2022, 1.1% above this figure. Exactly 671,639 people, around 12% of the population, paid in 2023. Main houses enjoy a 75% discount on the cadastral value; stocks and commercial real estate get 20%. Foreign assets are included, but debt is deductible.
Exiting Norway triggers an exit tax of 37.8% on unrealized capital gains above 3 million crowns (253,000 euros), as well as on unrealized capital gains on shares, which have increased in value but have not yet been sold. Loopholes that allowed emigrants to defer payment indefinitely were eliminated in 2024.
The changes have turned a trickle of departures into a torrent. According to data from the conservative think tank Civita, 261 residents with assets exceeding 10 million crowns (846,000 euros) left in 2022 and 254 in 2023, more than double the usual rate before the increase.
The ranking of the 400 richest people in Norway, drawn up by the business magazine Capitalshows that 105 now live abroad or have transferred their assets to relatives who do so. Some of his photos hang on the “wall of shame” in the offices of the small opposition Socialist Left party.
The wealth tax was a decisive issue in Norway’s September elections, which returned the Labor Party to power. The party had already raised taxes and tightened exit rules during its previous term.
Arguments in favor
Supporters argue that the tax acts as a redistributive protection mechanism in a country that eliminated inheritance tax in 2014 and is among the richest in the world thanks to oil, shipping and fishing.
Norway channels all revenue from its oil and gas industry into a sovereign wealth fund and limits annual withdrawals to 3% of the fund’s value under a self-imposed tax rule. This means you have to find other sources of income.
“The wealth tax makes the entire personal tax system more progressive than income tax alone,” Deputy Finance Minister Ellen Reitan told Reuters.
Revenue from this tax has increased despite the exodus and now amounts to 0.6% of GDP, a non-negligible sum. To put this into context, the UK Labor government is looking to make savings of a similar size to meet its fiscal targets.
A study by the Norwegian Statistics Office shows that entrepreneurs have enough cash to pay and that the burden falls mostly on the richest. Another study suggests that the tax could stimulate investment in human capital.
Norway remains among the fairest countries in the world and ranks among the top for ease of doing business.
“These findings suggest that the wealth tax does not directly hinder investment and employment at the firm level,” said Roberto Iacono, a professor at the Norwegian University of Science and Technology (NTNU).
A survey carried out by the Response agency for the newspaper Posters shortly before the September elections it emerged that 39% of Norwegians wanted the wealth tax to be maintained or increased, while 23% wanted a reduction and 28% supported its abolition.
The Norwegian Labor government is trying to reach a major deal on tax reform in the next two years by inviting all parties to the table. The trick? The wealth tax remains, in one form or another.
Arguments against
Critics argue that the model penalizes national ownership and risks undermining Norway’s trade base.
“The wealth tax system makes it difficult for companies to compete with the rest of the world,” said Knut-Erik Karlsen, who made his fortune in fish oil supplements and recently moved to Switzerland.
Norway taxes capital gains, unlike Switzerland, and imposes higher labor taxes than the OECD average.
About 40% of emigrants are entrepreneurs, according to Princeton researcher Christine Blandhol, who estimates that the latest tax changes will reduce Norwegian output by 1.3% in the long term. Others believe the tax hurts company performance.
A wealth tax is particularly harmful to startup founders, who pour in capital long before profits arrive.
Are Traasdahl left Norway in 2000 to market European mobile technology in the United States, founding and selling several technology companies, including the app now known as iHeartRadio. “I couldn’t have built in Norway what I built in the United States,” he said.
Norway has one of the lowest levels of venture capital to GDP in Europe: half that of Sweden and far behind the United States, according to OECD data.
Heirs often leave before taking control of the shares. Laurence Odfjell, now in Singapore, says staying could have cost him control of his shipping group during the recession that followed the 2008 global financial crisis. “I wouldn’t have let our company fail under my watch because we didn’t have the necessary capital,” he said.
Is it exclusively Norwegian?
So far, no country has followed Norway’s example. French lawmakers have ruled out a 2% tax on wealth above 100 million euros, opting instead for a lower levy on personal assets held in holding companies, a measure expected to raise just 1 billion euros.
Across the Channel, Britain’s Labor government has ruled out a formal wealth tax but insists it will continue to support those “with broader shoulders”.
Italy, for its part, remains opposed to increases in inheritance rates, but is quietly tightening its flat tax regime for wealthy foreigners.
Meanwhile, millionaires continue to emigrate. Norway is on track to lose another 150 this year, a sizable departure for a country of just 5.6 million people, according to Henley & Partners, which advises wealthy clients on relocation, and New World Wealth, which relies on public sources such as LinkedIn.
Britain tops the global list with 16,500 departures expected following the removal of tax exemptions for foreign residents. Among the main beneficiaries are the United Arab Emirates, the United States and Italy.
Norway’s social cohesion and oil wealth could make it difficult to copy its model. However, according to economists, this shows that any such tax involves a trade-off with economic and political dimensions.
“Not having a wealth tax generates greater inequality; having one means less capital for citizens startups” said Iacono, a professor at NTNU. “Politics has to find a balance.”
