Today, May 15, the Støre Government presented the Revised National Budget for 2025. The revised budget does not entail major changes in taxes and duties. The key takeaway is that there are no changes to the three-percent rule in the exemption method or to the shielding interest rate. Below is a brief overview of the key points concerning taxes and duties.
Also read: The 2025 national budget — Key tax and duty changes
No changes to the three-percent rule and shielding interest rate
Following the Torvik Committee’s proposal to expand the exemption method to include capital gains and increase the rate to five percent, the government has considered the Storting’s (Parliament’s) request to assess the level of the three-percent rule.
The exemption method prevents so-called chain taxation by exempting companies from tax on dividends and capital gains. The three-percent rule is an exception for dividends: three percent of the dividend is still considered taxable income for the receiving company. This results in an effective tax rate of 0.66 percent.
Thus, the three-percent rule remains unchanged for the time being.
The government has also followed up the Storting’s request to assess the level of the shielding interest rate on shares and has concluded that the current level should remain in place.
NOKUS rules to be reviewed
In the revised national budget, the Ministry of Finance announces that it will assess the relationship between the NOKUS rules and the supplementary tax rules, as the purposes of these frameworks overlap partly. The Ministry will examine whether simplifications or other changes should be introduced in the NOKUS rules for companies subject to both regulatory frameworks.
The Ministry will also assess the NOKUS exemption for companies domiciled in countries with which Norway has a tax treaty. The exemption currently applies to active investments and does not necessarily cover income of a passive nature such as interest, dividends, and royalties.
No timeline has been provided for these assessments.
Changes to the reduction factor for calculating property tax
The government proposes a legislative amendment to align the mandatory and local reduction factors for property tax on residential and recreational properties. The new rules are in line with recent case law from the Eidsivating Court of Appeal in 2023 and eliminate the possibility of a double effect of the reduction factor by only allowing deduction for the highest factor.
It is also proposed to introduce a deferred tax account arrangement for agriculture from January 1, 2025. In addition, a refund scheme is proposed for CO2 tax on fuel purchased at the Armed Forces' fuelling stations at full rate, but which is used for purposes entitled to exemption or reduced rates.
VAT
In January 2025, the Government presented a reduction of the value-added tax (VAT) rate on grid tariffs to 15 percent to lower electricity distribution costs. It has now been proposed to reduce the electricity tax by NOK 0.0044 (4.4 øre) per kWh for all months to mitigate the cost increase for households and businesses resulting from necessary investments in the power grid.
What’s perhaps most interesting in the Revised National Budget for 2025 is what is not included.
No changes are proposed to threshold amounts or personal allowances. Nor are there any proposed changes to net wealth tax or exit tax, as some might have expected with the upcoming election campaign.
