Funds taxation in Scandinavia: Norway acts to halt its outflow against Sweden

The Oslo government has finally proposed acting with regard to funds taxation in Norway to prevent financial and human capital flight to Sweden. 

The national financial sector ran out of patience  

In recent years, Norwegian fund managers have expressed their dissatisfaction multiple times with Oslo's tax regimes and have started a massive emigration of their products to counter tax-related competitive disadvantages compared to their peers within the European Economic Area.  Storebrand Asset Management's recent decision to move its Norway-domiciled funds to Sweden was the last straw.  Before the $102bn AUM giant's migration, many other leading Norwegian asset managers, such as Nordea Asset Management and Alfred Berg, also chose to relocate their funds to neighboring countries.

The Oslo government responded to the urgency within the Norwegian funds industry  

Shortly after the national leader Storebrand Asset Management decided to relocate its Norway-domiciled funds to Sweden, the Oslo government proposed aligning its tax practices for funds with those of its neighboring peers starting in 2026.  

"Many in the financial industry will be positively surprised that not only are changes coming for fixed-income funds, but also that there will be clear and swift changes to the taxation of dividends for equity funds", said Norwegian Finance Minister Trygve Slagsvold Vedum, according to E24.  

Under the new fiscal rules proposed by the Finance Minister, dividends received by Norwegian equity funds from non-EEA companies will be tax-exempt, and bond funds will benefit from revised tax rules.  These tax exemptions on dividends are welcome news for the Norwegian funds industry.  If the government's proposals are accepted, fund managers will need to monitor their dividends to ensure proper application of these tax exemption rules and engage in tax reclaim procedures, if applicable.