Scandinavian Working Papers in Economics
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Department of Economics, Uppsala University Working Paper Series, Uppsala Center for Fiscal Studies, Department of Economics, Uppsala University

No 2010:4:
The Norwegian Shareholder Tax Reconsidered

Jan Södersten () and Tobias Lindhe ()

Abstract: In an article in International Tax and Public Finance, Peter Birch Sørensen (2005) gives an in-depth account of the new Norwegian Shareholder Tax, which allows the shareholders a deduction for an imputed risk-free rate of return. Sørensen’s positive evaluation appears as reasonable for a closed economy where the deduction for the imputed return is capitalized into the market prices of corporate shares. We show that in a small open economy where no capitalization occurs, the Norwegian shareholder tax is likely to leave the distortions caused by the corporate income tax unaffected, and to add new distortions to shareholders’ portfolio decisions.

Keywords: Tax neutrality; open economy; shareholder taxation; corporate-personal tax integration; small firms; (follow links to similar papers)

JEL-Codes: H24; H25; (follow links to similar papers)

21 pages, May 25, 2010

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This paper is forthcoming as:
Södersten, Jan and Tobias Lindhe, 'The Norwegian Shareholder Tax Reconsidered', Forthcoming in International Tax and Public Finance.

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