Tax amnesty - voluntary correction

Do you have undeclared assets or income abroad? Now is the right time to apply for a voluntary correction.

A recent judgment made by the Norwegian Supreme Court illustrates the importance of reporting errors in tax and value added tax information as soon as possible.

Failure to report income

A Norwegian lawyer went to prison for three years and eight months because he failed to report Income. This could have been avoided if he decided to inform the authorities of the Income, without delay. Holding back information lead to an underpayment of taxes of approx  1,800,000  over a period of 10 years.

If the lawyer had requested a tax amnesty from the tax office without delay, at the time his colleagues discovered the situation and recommended him to correct it, he would not have been sentenced to prison. In addition, the penalty tax would not have been imposed.

Read more: Business in Norway - Avoid sanctions and penalty charges

Tax amnesty  voluntary correction

If you have foreign income and/or wealth, that has not been previously declared to the Norwegian Tax Administration, you can avoid penalties and punishment by using the voluntary correction process (tax amnesty).

Voluntary correction, known as a tax amnesty, is when you correct or complete information which hasn't previously been submitted or used in assessments. This is done so that the correct tax can be determined. This doesn't apply if the correction is the result of audits, which will or have been initiated. It also doesn't apply if the tax authorities correct the assessment based on information obtained from parties other than you. It's a condition that you provide complete and accurate information when making the correction. You must also provide information on the origin of the wealth/income.

If the conditions for voluntary correction are met, the tax office will amend the assessment and issue a new tax assessment. Penalty tax will not be imposed, but interest will be calculated on the tax that should have been paid. The tax administration will not report the matter to the police. The tax office can change tax assessments dating back ten years.

Exchange of information

Norway has signed several agreements with other countries concerning the exchange of information in tax cases. These agreements cover automatic exchange, individual tax cases, value-added tax and country-for-country reporting.

Norway has entered into agreements with several countries to combat tax evasion and international tax crime. Under these agreements, the Norwegian tax administration receives information from foreign tax authorities concerning Norwegian taxpayers financial capital and assets held in foreign financial institutions, as well as foreign income. The agreements also enable the Norwegian tax administration to obtain information from banks, financial institutions, etc. and to determine who is behind companies established in other countries.

In recent years, the Norwegian tax administration has received an increasing number of enquiries concerning voluntary correction.

Also read: A brief guide to your Norwegian tax return

Tidy up

If you want to tidy up your financial affairs, you must provide complete information on wealth and/or income and state where it comes from. The information is submitted to the tax administration along with documentation.

If you prefer to come clean, pay the correct tax and avoid the risk of penalties and fines, now it is the right time to act. Would you like assistance with tax amnesty? Magnus Legal AS has the correct knowledge and experience to help you.

Feel free to contact us for a non-binding talk today.

Download free guide Individual income tax return Norway

Article first published 18 June 2018 - Updated 25 March 2019