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      The Norwegian government presented its 2026 Budget Bill on 15 October 2025, introducing proposed changes that include an increase to the personal allowance, a reduction in the value added tax (“VAT”) exemption threshold for electric vehicles, and a change to the date for establishing wealth tax liability.1

      WHY THIS MATTERS

      The 2026 Budget Bill contains several measures that will affect mobile employees globally and the organizations managing their assignments. The increased personal allowance and reduced national insurance contribution rates may improve net income for employees working in or assigned to Norway. The lowered VAT exemption threshold for electric vehicles would increase VAT liability for more expensive cars, which may affect organizations’ mobility packages and company car policies.

      A key change concerns the date for establishing wealth tax liability. While the rules on tax residency remain unchanged, the relevant date for being tax resident for wealth tax purposes would shift from 1 January in the year after the income year to 31 December within the income year. This adjustment may require organizations and individuals to review their year-end residency status and related tax planning for mobile employees and owners of business assets.

      Background

      Before the proposed changes, Norway’s wealth tax liability was determined based on tax residency as of 1 January in the year following the income year. The VAT exemption for electric vehicles applied to cars valued at NOK 500,000. Personal tax brackets and allowances were stable, and the cooperative housing model allowed tax-free mergers under certain conditions. 

      Key Highlights of the Proposed Changes

      Personal Allowance and Bracket Tax

      Personal allowance is increased, and income thresholds for the bracket tax (trinnskatt) are raised, though rates remain unchanged.

      National Insurance Contributions

      Rates for wages/social security benefits and business income are reduced by 0.1 percent to 7.6 percent and 10.8 percent, respectively.

      Parental and Trade Union Deductions

      Parental allowance limits are reduced, and the maximum deduction for trade union fees increases to NOK 8,700.

      Labour Deduction for Young People

      A five-year experimental work deduction scheme will be introduced for approximately 100,000 young people.

      Wealth Tax Deferral Scheme

      Deferred payment of wealth tax exceeding NOK 30,000 for up to three years, subject to 9 percent interest and strict eligibility.

      Wealth Tax Liability Date

      The date for being tax resident for wealth tax liability shifts from 1 January in the year following the income year to 31 December in the income year. The rules for establishing tax residency remain unchanged.

      Mutual Fund Taxation

      Securities funds become largely exempt from tax on interest, equity income, and gains.

      Housing Cooperative Model

      Tax-free mergers into housing cooperatives will be abolished for decisions after 15 October 2025, with transitional rules to 1 April 2026.

      VAT for Remotely Supplied Services

      From 1 July 2026, expanded VAT liability and refund rules for cross-border services will apply, affecting multinational groups.

      VAT Loss Recognition

      Loss recognition for output VAT on related-party receivables restricted after 24 months, effective 1 January 2026.

      VAT Exemption for Electric Vehicles

      The threshold for VAT exemption is lowered from NOK 500,000 to NOK 300,000.

      KPMG INSIGHTS

      Steps to Consider

      In light of the proposed changes, and if those proposals take effect, organisations may wish to:

      • Review compensation and payroll models to reflect personal allowance and national insurance changes.

      • Assess the impact of the lower VAT exemption for electric vehicles on mobility and car policies.

      • Update tax planning and compliance procedures to reflect the new wealth tax liability date, specifying that residency status is confirmed at year-end.

      • Monitor transitional arrangements for housing cooperatives and VAT loss recognition.

      What’s Next?

      As the Government does not have the majority of the seats in Parliament, budget negotiations with four supporting parties are necessary to pass the budget. The final budget might not be ready until December; hence changes to the proposal are more than likely.

      Readers may wish to contact their usual immigration adviser, tax services or employment law professional, or a member of the KPMG team in Norway (see Contacts).

      FOOTNOTE:

      1  (In Norwegian) “Statsbudsjettett 2026: Dokumenter og pressemeldinger - regjeringen.no,” Regjeringen, published on 15 October 2025. 

      Contacts

      hakon-rakkenes
      Håkon Rakkenes

      Advokat/Attorney-at-law

      KPMG in Norway

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      The information contained in this newsletter was submitted by the KPMG International member firm in Norway.

      GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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