Equity Compensation in Norway: How Share Options and RSUs Are Taxed

Equity compensation such as share options and restricted stock units (RSUs) has become a popular way for Norwegian companies to attract and retain talent. However, these benefits come with complex tax rules that employees and employers must understand to avoid unexpected liabilities. This guide breaks down how the Norwegian tax system treats equity-based pay in 2025 and beyond.

📌 What Counts as Equity Compensation in Norway?

Equity compensation refers to benefits provided in the form of shares, share options, or RSUs instead of (or in addition to) cash salary. In Norway, the most common forms include:

• Share Options: The right to buy company shares at a predetermined price.
• Restricted Stock Units (RSUs): Shares granted to employees that typically vest over time.
• Employee Stock Purchase Programs (ESPP): Programs where employees buy shares at a discount.

💰 How Share Options Are Taxed

Share options are taxed as employment income when exercised. The taxable benefit is calculated as:

Market Value of Shares on Exercise Date – Exercise Price – Premium Paid

This benefit is subject to:

• Bracket Tax based on your personal income level.
• Social Security Contributions (7.8% for most employees).

Gains from selling the shares later are treated as capital income, taxed at 22%, adjusted by a factor of 1.72 for dividends and share gains, leading to an effective rate of 37.84%.

📊 RSUs: When Are They Taxed?

RSUs are taxed as employment income when they vest (i.e., when the employee gains full rights to the shares). The taxable amount is the fair market value of the shares at vesting.

• Subject to income tax and social security contributions.
• Future capital gains from selling vested shares are taxed separately as capital income.

⚖️ Special Rules and Considerations

• Holding Period: Taxable benefit is spread evenly if the option has been accumulated over several years.
• Exit Tax: If you leave Norway while holding options, exit tax rules may apply on latent gains.
• EEA Exemptions: Certain exemptions may apply for residents of EEA countries if social security contributions are covered abroad.
• Documentation: Proper valuation and reporting are mandatory to avoid penalties during tax audits.

📈 Example: Share Option Exercise in 2025

Suppose an employee exercises 1,000 options at NOK 50 each when the market price is NOK 100:

• Benefit: (100 – 50) × 1,000 = NOK 50,000
• Tax as Employment Income: Subject to bracket tax and 7.8% social security.
• Future Capital Gain: If shares later sold at NOK 120, extra gain of NOK 20,000 taxed as capital income.

✅ Tips for Employees & Employers

• Plan exercise and vesting dates carefully to manage tax liability.
• Consider regional social security agreements to reduce contributions.
• Keep accurate records of acquisition costs, exercise prices, and market values.
• Seek professional tax advice, especially if moving abroad or receiving large equity packages.