Kjell Inge Røkke wants to save millions in wealth taxes and can negotiate his own tax with the Swiss authorities.
It sparked strong reactions when one of Norway’s richest men, Kjell Inge Røkke, announced on Monday that he had moved to Lugano in Switzerland.
And you letter called “company mates and employees”, it does not indicate tax benefits as a reason.
– But it is clearly perceived as a fiscal move and a warning about wealth tax, says Ole Gjems-Onstad, a tax expert and professor emeritus at BI.
The rossoverde government has raised the wealth tax from 0.85% to 1.1% for those with assets exceeding NOK 20 million. At the same time, they reduced the so-called valuation discount on equities, residential and commercial real estate and operating assets from 45% to 25%. This means that you have to pay taxes on a larger percentage of the businesses you are sitting on.
In 2020, Røkke was one of Norway’s second largest contributors, behind salmon heir Gustav Magnar Witzøe. Since 2012, he has paid around NOK 1.2 billion in taxes.
He has to pay 1 million in wealth taxes every day all year round
How much money can Kjell Inge Røkke save by moving to Switzerland?
This calculation is twofold. One is the one who wants to save money by not paying the Norwegian tax rates on assets and dividends.
In 2020, Røkke had a net worth of NOK 19.6 billion in 2020, according to DN.
– With a careful guess, today could mean a net worth of at least NOK 25 billion. This will mean a wealth tax of NOK 275 million per year. To cover this, he must withdraw the equivalent in dividends. That means it will also have to pay 150 million in dividend taxes, says Gjems-Onstad.
– Or to put it simply, he has to pay NOK 1 million in taxes due to his wealth every day throughout the year, he says.
Individual agreements
It is unclear how much Røkke will have to pay in Switzerland. In Lugano, the property tax is 0.3 percent of the same values, according to Finansavisen.
NRK refers to an overview of the consulting firm To commute. According to it, the property tax in the new Røkke house in Ticino is 0.48% for assets over NOK 52 million.
In Norway, by comparison, it is a total of 1.1% on assets above NOK 10 million. If you take 2019 wealth data as a starting point, it would have saved NOK 120 million on wealth tax reduction alone, writes NRK.
But the Swiss authorities also have special tax rules for foreigners moving to the country. In addition, they enter into individual tax agreements with people who move to the country.
– But you can expect to pay a lot less than in Norway, says Gjems-Onstad.
He can sell shares without taxes
The second part of the tax calculation is about what Røkke can earn from the sale of shares after living in Switzerland for five years. After five years of residence, it is no longer necessary to comply with Norwegian tax rules. In Norway, you have to tax 35 percent of the increase in value when you sell shares. Switzerland has zero taxes on this.
– Røkke is estimated to have a fortune of around NOK 45 billion today. If two-thirds of this is assumed to be unrealized gain, it means he will not have to pay taxes on the equivalent of NOK 30 billion, says Gjems-Onstad.
He points out that this is a fictional example and finds it unlikely that Røkke will want to sell his companies en masse.
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