Norway clamps down on carry

Norway will tax carried interest as standard income rather than capital gains meaning a tax hike of 20 percent for Norwegian GPs.

Income tax in Norway reflects either income from capital, employment or business, all of which are taxed at different rates. In the past Norway charged carry at the 28 percent capital gains rate but will now charge GPs the 48 percent it charges for income from employment – if that income reaches a certain level.

The source of income is considered based on the circumstances of each case, and is a part of the regular and annual tax assessment performed by the Norwegian tax authority.

The tax administration has the power to change previous tax assessments, for example if the prior information given in the tax return is incomplete or it views the tax assessment to be incorrect. 

Norwegian press reported three executives from Norwegian private equity firm Herkules Capital received a claim of nearly NOK 87 million (€11 million; $14 million) and that other GPs had been stung with similar demands. However the tax authority could not comment on specific cases due to confidentiality issues.