On 7 October 2026, the Norwegian Government presented its proposed State Budget for 2027, outlining significant changes to the tax and duty framework. The budget, submitted by the Støre administration, aims to address fiscal sustainability, climate transition funding, and international tax alignment. Key proposals include adjustments to corporate income tax rates, modifications to value-added tax (VAT) exemptions, new environmental taxes, and updates to wealth tax thresholds. The announcement signals the government’s intent to broaden the tax base while maintaining competitiveness. This PwC Norway analysis provides a comprehensive overview of the most impactful measures affecting domestic and multinational enterprises. The budget reflects a continued shift towards green taxation, with increased levies on emissions and a reduction in fossil fuel subsidies. Additionally, the government proposes measures to combat tax avoidance, including stricter controlled foreign company (CFC) rules and enhanced disclosure requirements for cross-border transactions. The budget also addresses the digital economy, proposing a digital services tax aligned with OECD developments. For the financial sector, the budget signals a review of the financial activity tax and potential VAT on insurance services. Overall, the 2027 budget represents a comprehensive reform package that will require careful planning by businesses operating in Norway.
Key Takeaways
- Corporate Tax Rate Adjustments: The budget proposes a reduction in the nominal corporate income tax rate from 22% to 21%, effective 1 January 2027, coupled with a limitation on interest deductions for highly leveraged groups. This move aligns Norway with global minimum tax standards under OECD Pillar Two. The interest limitation rule will restrict net interest deductions to 25% of EBITDA, with a de minimis threshold of NOK 25 million. Groups exceeding this threshold must calculate deductible interest at the group level, potentially increasing tax costs for leveraged acquisitions and real estate investments.
- VAT Base Broadening: Several VAT exemptions are slated for removal, including those for certain financial services and cultural events, effective 1 July 2027. Businesses must prepare for increased compliance obligations and potential price adjustments. The removal of the VAT exemption for financial services will particularly impact banks, insurance companies, and investment firms, which will need to register for VAT and charge output tax on previously exempt services. Input VAT recovery will become possible, but the net effect may increase costs for consumers. The cultural sector will see VAT applied to admission fees for museums, concerts, and theatres, ending a long-standing exemption.
- Environmental Tax Enhancements: New carbon leakage measures and increased taxes on petroleum activities are introduced to fund green transition. A revised CO2 tax on offshore emissions will apply from 2027, impacting energy sector profitability. The budget proposes an increase in the CO2 tax rate for petroleum activities from NOK 1.27 per kg to NOK 1.50 per kg, and an extension of the tax to cover flaring and venting. Additionally, a new tax on hydraulic fracturing (fracking) is proposed. These measures aim to incentivize emission reductions and finance renewable energy investments. Companies in the oil and gas sector should model the impact on project economics and decommissioning provisions.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement