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The Ex-Wives' Charter, Norwegian Style

Penelope Wise
22 November, 2009

In Cyprus recently for a family occasion, I met up for drinks with a Norwegian girl-friend. Although it was only just lunchtime, Dolly was clearly somewhat the worse for wear – this is what happens to all too many expats, of course, not enough to do and too much spare dosh – and I've never seen her so excited. "The swine," she said, and I knew she must have been referring to her ex-husband, Knut, always known to everyone as 'Nuts' (don't ask), "He's done me in big-time. Look at this!"

She thrust a copy of the local expat rag under my nose from two weeks before, and the second lead was a story about the Norwegian taxpayers list. I had noticed it myself in the British newspapers, but not having any Norwegian ex-husbands I hadn't really stopped over it. In Norway each year the tax authority publishes a list of how much tax everyone has paid, and from that you can work out something at least of how much they're worth, although it only includes Norwegian income.

Two drinks later, after Dolly had calmed down a bit and stopped cursing out Nuts, I got her to tell me what had happened. Nuts, who is a fairly successful ship-owner, had returned to Norway to live in 2008 after the Norwegians improved their tonnage tax (shipping tax) regime. He had been living with Dolly in Cyprus for twenty years or so, where there is also a very good shipping taxation regime. They were rather tired of each other, and they agreed in a fairly civilized way to get divorced so that Nuts could marry his Swedish mistress. Dolly had known about her for years. There was a hearing in Cyprus, property division etc, and the Court ordered Nuts to pay Dolly 20% of his declared average income to Dolly for life. Since he had declared income of 800,000 euros, and that didn't seem unreasonable to Dolly, she accepted. EUR160,000 a year isn't exactly starvation wages for doing nothing.

"This arrived today," said Dolly, shoving another piece of paper across the table and knocking over her drink in the process. She was still quite excited! By the time the waiter had cleared up the mess and we had got Dolly another drink, the piece of paper was sodden and hardly legible any more, but I could see that it was a document from the Norwegian tax authority, the Skatteetaten. "But it's in Norwegian," I pointed out. "Oh yes, of course," said Dolly in that way of hers that makes you feel stupid, "Well, can't you see the figure? Look!" She jabbed at the paper. And indeed I could just about make out a figure with a lot of noughts after it. "It's forty million," said Dolly triumphantly. "Krone of course. That's almost five million euros. That's the tax he paid, so it means his income must be at least double that. That's just in Norway. And he told the court he didn't have any income in Norway!"

Dolly was working herself up into a righteous fury, so I tried pointing out that maybe he had sold some shares, or a ship, and this was capital gains tax, but she wasn't listening. She stormed off eventually towards her lawyer's office, but it's hard to see what she can achieve except to pay a lot more fees and get nothing.

After she left I sat over my drink, pondering the Norwegian system. Hardly any other country does it, although in many countries, if you are in a public position you are either expected to disclose your tax affairs, or in some cases they are publicly available. Transparency is all the rage, nowadays, but the Norwegian full monty seems to be going a bit too far. Or is it? Despite all of the TIEAs being signed left, right and centre, and for all of the G20's grey, black and for all I know purple lists, it's still not that difficult for a resourceful and especially a rich and well-advised person to hide their international assets and income flows. How fair is that on fellow taxpayers and ex-wives?

When it comes to public companies, which seek investment from joe public, the situation is different, of course. They publish annual reports, which by law have full details of income, expenses and taxation, along with lots of other stuff. In most countries, the annual reports of even private companies are in the public domain as well, although you have to pay to see them.

Why should individuals be different from companies? In the long term – the very long term – the pressure for individuals to be fiscally transparent as well will be too great to resist. This will happen because richer people will always seek to live in and be taxed in lower-taxing jurisdictions, and the day will come when the cash-strapped, high-taxing countries will club together in a G40 or G60 or G99 to make the lower-taxing 'offshore' countries open up their books. Once an individual's global fiscal affairs are captured on the all-inclusive and public data-base that will then exist, secrecy will truly have gone. You will still be able to live in Jersey and commute as a non-resident to the House of Lords two days a week; but the days of pleading poverty to your ex-wife will be over.


About the Author

Penelope Wise

Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.


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