Global Daily Tax News, Norway Proposes Tax Law Changes For Funds, (Feb 3, 2025)

Norway's Ministry of Finance has released for consultation proposed changes to the Tax Act's provisions governing mutual funds and unitholders.

The consultation considers measures to complement new rules that were introduced, following a major overhaul, in 2016.

The Ministry said the changes proposed will counteract economic double taxation and provide the funds with better framework conditions.

Presently, interest income is taxable both in the hands of the fund itself and those of the unitholders. In some situations, this may mean that the same interest income is taxed twice. The consultation describes two solutions to this problem.

The Ministry's preferred solution would see mutual funds being exempt from tax on interest income, so that all taxation of interest income occurs with the unitholder.

Alternatively, mutual funds would be allowed a deduction from their income both when distributing to the unitholder and when the unitholder redeems a unit at a profit.

Further, the Ministry is proposing to alter the scope of a special provision that exempts mutual funds from tax liability on gains on the sale of shares in companies domiciled in countries outside the EEA. On the one hand, the Ministry is proposing that the scope of the exemption be expanded to include dividends from companies domiciled in countries outside the EEA and to financial instruments with shares as the underlying object. On the other, it has said the aforementioned exemption should not apply to gains on and dividends from shares in companies in low-tax jurisdictions.

Among other things, the consultation also proposes a change to the definition of what constitutes a securities fund for Tax Act purposes.

Feedback is being sought on the proposals by April 30, 2025.