Fundamentally, all shares in a company confer equal rights to the company according to company law. However, the articles of association can specify different types of shares (multiple share classes), such as those with varying voting and dividend rights. Share classes are useful tools for regulating specific ownership needs in a company. They are frequently used in family-owned businesses and in connection with employee incentive programs.
Current tax rules on asset valuation
Shares are considered part of an individual’s taxable wealth. Current valuation rules are straightforward and standardized. Unlisted shares are valued at 80% of the share’s proportion of the company’s total tax-assessed asset value. There’s no differentiated tax-based valuation based on the characteristics of individual shares. In other words, each share has an identical tax-assessed value, regardless of whether the shares actually have different market values.
These changes are being considered
In June 2023, AP, SP, and SV agreed to ‘investigate differentiated valuation of unlisted shares in wealth tax based on the characteristics of each individual share, such as different voting and dividend rights, so that the valuation of each individual share more closely aligns with actual market value.‘ [1] The reason behind this is that the current red-green government and SV are exploring opportunities to prevent circumventions. For instance, this might apply in situations where B-shares, constituting a significant portion of the company’s total asset value, are owned by children or individuals abroad, while the parental generation, liable to taxation in Norway, controls A-shares that represent a low portion of the company’s asset value. If changes are proposed, a possible consequence could be the transfer of the value of B-shares owned by individuals abroad to A-shares owned by taxable shareholders in Norway if the valuation warrants it. However, if all shareholders are taxable in Norway, differing valuation of share classes, in principle, would not impact the government’s tax revenue.
As of today, the government has not presented any investigation or proposal for changes in the valuation rules. Shareholders and companies with different share classes, or those considering introducing such classes, should, however, keep an eye on developments and political signals, and consider necessary actions as needed.
[1] Set 490 S (2022-2023) Recommendation from the Finance Committee on Revised national budget 2023
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