Hard Lessons of Ex­pa­tri­ate Tax­a­tion.

Mr Er­land Nørstebø, Part­ner and Head of Global Mo­bil­ity at PwC, re­sponds can­didly. How many peo­ple make mis­takes with taxes when moving abroad? A lot.

Norway-Asia Business Review - - Contents - ANRIKE VISSER

Tax­a­tion is no rocket science; you just have to be up­front. Do not wait un­til it is later, be­cause it is so frus­tra­tion and time-con­sum­ing af­ter­wards.

Peo­ple tend to take the ex­pe­ri­ence of some­one else and ap­ply that to their own sit­u­a­tion. Then a few months or also a few years later they find out they made a big mis­take. “The most com­mon mis­take is that Nor­we­gians move abroad and mis­tak­enly as­sume they are not li­able to pay taxes in Nor­way any longer. This is re­ally not the case. Nor­mally you are con­sid­ered a tax res­i­dent of Nor­way even if you move abroad. If your goal is to avoid pay­ing taxes to Nor­way (i.e to avoid pay­ing wealth tax to Nor­way), there are some reg­u­la­tions you need to com­ply with.

Mr Nørstebø ex­plains the ground rules for be­ing con­sid­ered for re­lease of tax­a­tion. “If you in­tend to stay abroad for a long pe­riod with no plans for moving back to Nor­way, you may be con­sid­ered as a non-tax res­i­dent of Nor­way. As a non-tax res­i­dent you are in gen­eral not li­able to pay any taxes or file any tax re­turn to Nor­way. How­ever to be­come a non-tax res­i­dent, you need to prove that you ful­fil the con­di­tions the first three years af­ter the year you moved out from Nor­way. The con­di­tions you need to com­ply with are that you have per­ma­nently moved out of Nor­way, that you don’t own any prop­erty or have any house for your dis­posal in Nor­way. And you are only al­lowed to stay in Nor­way for a limited amount of time, max­i­mum 61 days a year.

So the first years af­ter you moved from Nor­way you have to file your tax re­turn and claim that you should be treated as a non-tax res­i­dent of Nor­way. If you moved from Nor­way in 2016, you need to claim this in the tax re­turn for 2016, 2017, 2018 and 2019. Then from 2020 the Nor­we­gian Tax Au­thor­i­ties will ac­cept you as a non-tax res­i­dent.

“Does that mean that a Nor­we­gian have to pay or­di­nary tax to Nor­way dur­ing this pe­riod?” No, and this is some­thing we of­ten see peo­ple make mis­take about. If or when you claim that you should be treated as a non-tax res­i­dent, you will nor­mally be in a position where you are a tax res­i­dent of an­other coun­try. This is some­thing you need fol­low up when you file your Nor­we­gian Tax Re­turn. In the pe­riod when Nor­way is con­sid­er­ing if you com­ply with the reg­u­la­tions for be­ing a non-tax res­i­dent of Nor­way, you should use the dou­ble tax treaty be­tween the two coun­tries to avoid any dou­ble tax­a­tion sit­u­a­tion.

For those who doesn’t want to break all their con­nec­tions to Nor­way or want to spend more of their time in Nor­way dur­ing the year, it is im­por­tant to un­der­stand that you won’t end up with any dou­ble tax­a­tion if you are do­ing

thing cor­rectly. As men­tioned above dou­ble tax treaties are made to avoid dou­ble tax­a­tion. Just make sure that you un­der­stand what taxes are cov­ered in the tax treaties. In case you are a Nor­we­gian tax res­i­dent and use a dou­ble tax treaty to avoid any dou­ble tax­a­tion, you are li­able to file a tax re­turn.

It is im­por­tant to men­tion that if you af­ter a few years think that it would be okay to have a apart­ment or condo back home in Nor­way, you can buy this with­out be­ing con­sid­ered as a tax res­i­dent of Nor­way again. But have in mind that you will then be limited tax­able to Nor­way for this prop­erty and you will have to file a tax re­turn again.

The Nor­we­gian Busi­ness As­so­ci­a­tion in Sin­ga­pore ar­ranges a tax sem­i­nar for the Nor­we­gians liv­ing in Sin­ga­pore ev­ery year. “Sin­ga­pore has to­gether with Hous­ton in the US the largest pop­u­la­tions of Nor­we­gians liv­ing and work­ing abroad. I have been giv­ing sem­i­nars here for al­most ten years, but the de­mand for in­for­ma­tion re­mains. If I meet ten dif­fer­ent Nor­we­gians, they will have ten dif­fer­ent sto­ries about tax­a­tion.” As long as this is the case, the need tax ad­vice re­mains.

Mr Nørstebø’s ad­vice is to plan up­front. Don’t just think that if I move abroad tax­a­tion will be so much eas­ier. You have to take some ac­tions to get there. Don’t for­get to hand in a tax re­turn as long as this is re­quired. Have in mind that more peo­ple mi­grate ev­ery year, so tax au­thor­i­ties are mak­ing more of an ef­fort and shar­ing more in­for­ma­tion across borders.”

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