Nordic Tax Research Council
The Nordic Tax Research Council consists of members from five Nordic countries. Denmark, Finland, Norway, Sweden and Iceland - each from whom represent legal
We need an exit tax! How to design it?
Nordic tax experts agree that we need an exit tax in times of mobility and instability. The devil is, however, as always in the details. How to design such a tax with a minimum unwanted side effects and distortions?
The Nordic Tax Research Council is made up of Nordic experts on the legal and economic aspects of taxation. The Council holds an annual seminar on a relevant topic.
This year the gathering was held in Bergen, discussing how to develop the tax system in times of unrest, mobility and instability.
Taxation on exit from a country
The taxation of wealth and of accrued income upon emigration have been subjects of considerable debate in Norway. A new system have been introduced by the current Norwegian government, against claims it will be detrimental to entrepreneurship and cause migration of talented individuals.
Ole-Andreas Elvik Næss, postdoctoral researcher at NHH, moderated a panel debate with participants Ilpo Kauppinen of (VATT Institute of Economic Research, Finland), Astrid Erlingsen (Norwegian Ministry of Finance), Harald Hauge (Wikborg Rein), Peter K. Scmidt (Copenhagen Business School), and Gisle James Natvik (BI Norwegian Business School).
The panel unanimously agreed: yes, there should be an exit tax.
`Without it, payment of capital gains tax becomes voluntary´, according to Scmidt of CBS.
Lytt til skatteflyktningene, få dem hjem – og få 50 mrd. mer i skatt
Vi bør finne ut hva som skal til for å lokke skatteflyktningene hjem før 2027. Klarer vi det, tjener fellesskapet 50 milliarder kroner – mye mer enn vi taper på å la dem slippe formuesskatt livet ut.
An exit tax that works?
The main challenge still lies with tax experts; designing an exit tax that works, without causing unreasonable side effects. While there was broad agreement that the ideal solution would involve comprehensive tax agreements between countries, lawyer Harald Hauge took a contrarian view. He argued that any tax should consider that when people migrate, it is normally because “life happens”, not for tax reasons, and that a system shouldn't be built on the assumption that most migrants are fraudsters.
The main problem with any exit tax was soon defined as the problem stemming from Norway’s system of allowing those who have substantial capital income to defer taxes by accruing capital income in a holding company. This makes the nominal tax rate of capital income much higher than the tax rate paid by many of the most affluent Norwegians. The new exit tax could equal nominal and real tax rate on capital income, as well as taxing unrealized capital income, both of which would mean a significant rise in capital taxation, harming invertors and entrepreneurs.
How this dilemma will be solved remains for elected politicians to consider.
Award for paper on simpler EU-rules
Editor Floris Zoutmann of the Council’s academic journal announced the winner of the journal’s annual award, and €3000, for the best paper of the year, as voted on by the associated editors. The winner was Andrzej Stasio who along with Serena Fatica, Jonathan Pycroft and Daniel Stöhlker for their paper for the European Commission to simplify procedures for how European investors can avoid double taxation across borders.
Zoutmann pointed out that the paper was highly relevant for the Commissions’ work on how to simplify procedures. It was based on solid data from real investors, and showed that even modest procedural simplifications could lead to a positive economic impact.
The limited role of inheritance in wealth inequality
While inheritances matter for some, particularly those with very wealthy parents, they do not play a significant role in overall wealth inequality.