How Dividends Are Taxed in Norway: Understanding the 1.72 Adjustment Rule

Dividend taxation in Norway is often a point of confusion, especially due to the 1.72 adjustment rule. This adjustment increases the taxable amount of dividends before the 22% general income tax is applied, leading to an effective tax rate much higher than the base rate. This guide explains how dividends are taxed in Norway, how the 1.72 factor works, and what investors can do to manage their tax liability.

📌 The Basics of Dividend Taxation in Norway

Dividends received from shares are considered taxable capital income for Norwegian residents. While the general income tax rate is 22%, dividends are not taxed at face value. Instead, the amount is adjusted upwards by a multiplier before applying the tax rate.

🔢 The 1.72 Adjustment Rule Explained

As of 2025, dividends are multiplied by 1.72 before being taxed at 22%. This rule is designed to align the taxation of dividends with wage earners and to prevent excessive tax benefits from equity investments.

Example calculation:

• Dividend received: NOK 10,000
• Adjusted base: 10,000 × 1.72 = NOK 17,200
• Tax: 22% of 17,200 = NOK 3,784
• Effective tax rate: 37.84%

📊 Effective Tax Rates for Different Dividend Amounts

Dividend Amount	Adjusted Base (×1.72)	Tax Due (22%)	Effective Tax Rate
NOK 5,000	8,600	1,892	37.84%
NOK 20,000	34,400	7,568	37.84%
NOK 50,000	86,000	18,920	37.84%

🏦 Exemptions and Special Rules

• Share Savings Account (ASK): Dividends within an ASK are tax-deferred until withdrawn.
• Corporate Shareholders: Dividends received by companies may qualify for the participation exemption method.
• Non-Residents: Subject to a withholding tax (WHT), usually 25%, but may be reduced under double tax treaties.

📌 How to Report Dividends in Your Tax Return

Dividends must be declared in your skattemelding (Norwegian tax return). Information is usually pre-filled, but you should:

• Check the dividend amounts against bank/broker statements.
• Ensure correct adjustment with the 1.72 factor is applied.
• Report any foreign dividends separately, applying tax treaty credits if applicable.

💡 Tips to Reduce Dividend Tax Burden

• Invest through an ASK account for tax deferral.
• Consider timing withdrawals to manage annual income thresholds.
• Offset dividend tax with deductible interest expenses and losses.
• Use tax treaty benefits if receiving dividends from foreign companies.

✅ Final Thoughts

The 1.72 adjustment rule significantly increases the effective tax rate on dividends in Norway, making it essential for investors to plan ahead. By leveraging tax-advantaged accounts and understanding reporting obligations, you can remain compliant and reduce your overall tax liability.