Why Norway's Super-Rich are Abandoning the Country?

In 2022, Norway saw a record number of super-rich individuals leaving the country for low-tax destinations after the centre-left government increased wealth taxes to 1.1%. More than 30 billionaires and multimillionaires packed their bags and headed to tax havens, costing the government tens of millions in lost tax revenue. But what caused this exodus of wealth and how is it affecting Norway's economy?

The Norwegian newspaper Dagens Naeringsliv recently conducted research that revealed the number of super-rich people leaving the country in 2022 was higher than the total number of departures during the previous 13 years. The wealth tax increase in November was the tipping point for many wealthy Norwegians who sought lower tax jurisdictions. Even more super-rich individuals are expected to leave the country in 2023, which will further dent Norway's tax receipts.

Their Destination?

But where are these wealthy Norwegians moving to? Switzerland is one of the preferred destinations for those seeking a low-tax environment. Among the high-net-worth individuals that moved to Switzerland was billionaire fisher turned industrial tycoon Kjell Inge Røkke, the billionaire fisher turned industrial tycoon, is the fourth-richest Norwegian with an estimated fortune of about NOK 19.6bn (£1.5bn). He recently announced his relocation to Lugano, a city in Switzerland, where taxes are much lower, to save on taxes. His move to Switzerland will cost Norway about NOK 175m in lost tax revenue every year. Last year, Røkke was the country’s highest taxed individual. He has paid about NOK 1.5bn in tax since 2008.

Røkke's 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, and 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 for couples, taking the maximum wealth tax rate to 1.1%. This the one of many example.

The Mass Exodus

The Norwegian Business School's Professor Emeritus Ole Gjems-Onstad estimated that the super-rich who left the country had a combined fortune of at least NOK 600bn. He compared the mass exodus to Brexit, saying that it was a little bit like Norway's version of self-harm. "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."

Reaction of Norway Finance ministry

Erlend Grimstad, a state secretary in the Ministry of Finance, said 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

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