Various sources have acknowledged that Bø i Vesterålen serves as a tax haven for the wealthy in Norway. The municipality in Nordland county has been in the headlines for about a year, mentioning that this is just one of the tax havens that those with Norwegian passports take advantage of.
Increasing Its Appeal Even More
In early 2021, Bø i Vesterålen leveled up its appeal to wealthy Norwegians by reducing its wealth tax. The mayor of the municipality, commonly called Bø, is conservative Sture Pederson. He thinks that a tax break would encourage some of the richest people in the country to buy real estate in Bø and move to the municipality.
The ultimate goal is to boost the income of the region by attracting new taxpayers. It would also bring more economic opportunities.
Understanding the Wealth Tax
To understand how Bø is able to offer this tax planning benefit to those with residency, consider that Norway currently charges a wealth tax of 0.85%. This tax is charged to any resident’s assets (globally) greater than 1.5 million kroner (the equivalent of $172,000). As a side note, this wealth tax scheme has also led to many wealthy Norwegians moving, as they want to avoid paying it.
In most municipalities, 0.15% of this tax goes to the Norwegian state and the other 0.7% goes to the municipality. However, municipalities are allowed to lower this tax rate if they choose.
Bø decided to lower its tax rate to just 0.20%. This means that a company, entity, or person in Bø only has to pay a 0.35% wealth tax.
Not counting the new residents that the tax break has attracted to Bø, some 400-500 current residents will likely benefit from this change.
The Reasons for the Change
According to an interview with High North News in August 2020, Mayor Pedersen said that public authorities had “abandoned” the municipality years ago. Bø has been dealing with a declining population. The council chose to try lowering its municipal wealth tax to attract more private businesses and people.
Pedersen has long argued that by strengthening the local business sector, public services will also improve. The idea is that the foundation assets and private equity funds will serve as investments in Bø. In the case of companies that move to Bø with management and shareholders following, there can be even more funding.
Success Began Early
As of the August 2020 interview with High North News, the initiative had already been a success, despite not going into effect until 2021. The publication talked to Kristian Adolfsen, an Adolfsen Group co-founder. He decided to move to Bø, thanks to the wealth tax reduction. According to Adolfsen, this lets the company keep more of its capital. That, in turn, helps with growth instead of having to pay wealth tax.
Mayor Pedersen said that Adolfsen was far from the only person interested. He also talked to many private business managers and directors who are considering moving to Bø to reduce their corporate tax on wealth.
The Idea May Expand
Depending on how successful Bø’s move to reduce the wealth tax and become a tax haven goes, other northern municipalities may follow suit. This is a great way for them to attract wealthy people in Norway and then gain their trust.
The lower wealth tax seems like it will benefit all parties in Bø. The municipality will receive more funding in taxes by attracting more people, more than making up for the reduced tax revenue per person. This will give the municipality more fiduciary freedom and the ability to provide more public services. The result should be making Bø a better place to live in.
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