Norway’s Wealth Tax Sparks Millionaire Exodus — But Reinforces Its Equality Model

Sitting in his lakeside villa in Lucerne, Switzerland, former carpenter–turned–real estate tycoon Borger Borgenhaug often finds his thoughts returning to Norway — to summer nights scented with the Nordic Sea and to memories of his grandchildren.

Borgenhaug, who left Norway in 2022, says these are the emotional costs he pays to escape the country’s sharply increased wealth tax — an annual levy that has prompted hundreds of millionaires to move abroad, even as it strengthens one of the world’s most equal societies.

“Norway’s political climate is becoming increasingly hostile for business owners,” he told Reuters.

With a wealth tax in place since 1892 and a long-standing culture of transparency that allows citizens to view one another’s tax returns, Norway has more experience than most countries in taxing the wealthy. Its model is now studied by policymakers from the UK to France and Italy — and even cities like New York — as they debate similar measures.

Bottom line: a wealth tax may deter part of the millionaire class, but when implemented at scale, it still generates meaningful revenue.

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A Surge in Wealthy Residents Leaving

The levy was a key issue in Norway’s September elections, which returned the Labour Party to power. In its previous term, the party raised the rate and tightened exit rules.

Norwegians pay 1% to 1.1% on net wealth between 1.76 million and 20.7 million kroner ($174,000–$2 million).
Exactly 671,639 people — about 12% of the population — paid the tax in 2023.

Primary homes receive a 75% valuation discount, while shares and commercial property qualify for a 20% discount. Overseas assets are included in the calculation, and debt is deductible.

Leaving Norway triggers a 37.8% exit tax on unrealized capital gains above 3 million kroner — including gains on shares that have risen in value but haven’t been sold. Loopholes that once allowed emigrants to defer payment indefinitely were abolished in 2024.

These changes turned a slow trickle into a steady outflow.
Conservative think-tank Civita reports:

• 261 people with more than 10 million kroner in assets left in 2022
• 254 more in 2023 — more than double the pre-increase annual rate.

A new ranking by business magazine Kapital shows 105 of Norway’s 400 wealthiest individuals now live abroad or have moved assets to relatives overseas. Their photos even hang on a “wall of shame” in the Socialist Left Party’s office.

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The Case for Equality — and Revenue

Supporters argue that the wealth tax acts as a redistributive backstop in a country that abolished inheritance tax in 2014 and still ranks among the world’s richest thanks to oil, shipping, and fisheries.

Norway channels all petroleum revenue into a sovereign wealth fund and limits annual withdrawals to 3% of the fund’s value. This forces the government to find other sources of revenue to sustain its welfare system.

“The wealth tax makes the overall personal-tax structure more progressive than income tax alone ever could,” Deputy Finance Minister Ellen Reitan told Reuters.

Despite the exodus, revenues have increased, now accounting for 0.6% of GDP — a significant amount.
For comparison, Britain’s new Labour government is looking for savings of a similar scale to meet its fiscal targets.

Research from Norway’s statistics office finds that entrepreneurs generally have enough liquidity to pay the tax and that the burden falls overwhelmingly on the wealthiest. Another study suggests the tax may even encourage investment in human capital.

Norway remains one of the world’s most equal countries and maintains a strong ranking for ease of doing business.

“There’s no evidence that the wealth tax directly restricts firm-level investment or employment,” said Robert Iacono, professor at the Norwegian University of Science and Technology (NTNU).

A pre-election poll found that 39% of Norwegians wanted the tax maintained or increased, 23% wanted it reduced, and 28% wanted it scrapped.

The Labour government now wants a broad, cross-party tax reform deal within two years. The challenge: the wealth tax will remain — in some form.

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The Case Against: Capital Flight and Startup Pain

Critics argue that the system penalizes domestic ownership and risks hollowing out Norway’s entrepreneurial base.

Nut-Erik Karlsen, who made his fortune in fish-oil supplements before moving to Switzerland, said:
“The wealth tax system makes it difficult for Norwegian companies to compete with the rest of the world.”

Unlike Switzerland, Norway also taxes capital gains and imposes labour levies above the OECD average.

Princeton researcher Christine Blanhol estimates that nearly 40% of those leaving are business owners, and that the latest changes could reduce Norway’s long-term output by 1.3%. Other analysts believe the tax affects firm performance in more subtle ways.

The levy is especially tough on startup founders, who are often taxed on capital long before their companies become profitable.

Are Traasdahl, who left Norway in 2000 and later launched — and sold — multiple tech firms including the app now known as iHeartRadio, said:
“There was no way I could have built in Norway what I built in the United States.”

OECD data shows Norway’s venture-capital investment — measured as a share of GDP — is among the lowest in Europe, less than half of Sweden’s and far behind the US.

Heirs often move abroad even before taking control of family firms. Laurence Odfjell, now based in Singapore, said staying in Norway during the post-2008 downturn could have forced him to surrender control of his shipping group.

“I wasn’t going to let my company go under simply because I lacked capital,” he said.

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Can Other Countries Replicate Norway’s Model?

So far, no other country is following Norway’s exact path.

France scrapped its 2% levy on wealth above €100 million and opted for a lighter charge on assets held in holding companies — expected to raise barely €1 billion.

In the UK, the Labour government has rejected a formal wealth tax but insists it will rely more on “those with the broadest shoulders.”

Italy continues to avoid raising inheritance tax but is quietly tightening its flat-tax regime for wealthy foreigners.

Meanwhile, millionaires are still “voting with their feet.”
According to Henley & Partners and New World Wealth, Norway is set to lose another 150 millionaires this year — a significant outflow for a country of just 5.6 million people.

Britain tops the global list of departures after scrapping tax breaks for foreigners, with 16,500 expected to leave. The UAE, US, and Italy are among the biggest gainers.

Norway’s strong social cohesion and oil wealth make its model hard to replicate, but economists say the broader lesson is clear: any wealth-tax system requires political — and economic — trade-offs.

“Abolishing the wealthy tax increases inequality; keeping it means less capital for startups,” Professor Iacono said.
“Politics is ultimately about choosing the balance.”

($1 = 10.2757 Norwegian kroner)