– Violates human rights – E24
New special rules for private consumption will hit far more people than the government wants to hit, says lawyer and tax law expert.
In a new proposal for changes in tax rules, the government will put an end to private consumption of personal items such as private planes and cabins, camouflaged by the company.
It will be a completely wrong use of the tax system, according to the law firm Wiersholm’s tax experts.
– I think you haven’t thought this through, you just wanted to set a level that is so high that it acts as a deterrent. So the consequences have not been thought through, and that there are no limits, says partner Bettina Banoun in Wiersholm.
The “loophole” the government wants to eliminate can be used either by a company buying property that is in reality used by private individuals, or by a company buying property and selling it on to shareholders at a discount.
To achieve this, the new proposal for taxation of private consumption is designed to deter this type of business. For companies that own a home, holiday property, boat, plane or helicopter and have a personal owner with more than 50 percent control, the government will increase the tax rates for the owner.
– Very special
For boats, airplanes and helicopters, they will calculate the income at 104 percent of the acquisition cost per year. For property, it will come to 26 percent. It will be possible to get a deduction if it can be documented that the company rents out earns.
Banoun believes the proposal is too broad and that it does not make sense to tax anything far beyond a realistic sum for return on the asset.
– Using the tax system to almost prohibit companies from buying airplanes, boats or housing is very special, she says.
This is also where the lawyers in Wiersholm believe the proposal goes against human rights. Banoun points out that in the European Convention on Human Rights it is recorded in the minutes “the right of citizens to enjoy their wealth”, and that taxes must not be excessively high.
In Denmark, there are similar tax rules that the governments are now proposing, but these are not as comprehensive. Among other things, airplanes are exempt. Banoun believes the government cannot propose stricter rules than in Denmark, and must make a more nuanced proposal.
– What you want is to find out what special economic advantage the shareholder has received, not to make rules that make it impossible to operate, for example, the taxi boat business or the rental of cabins. You go to work far too hard, says Banoun.
She believes the government could well try a so-called template taxation – meaning that the income is determined or calculated in advance by the legislature. But if they have to use a template taxation, Banoun believes that they must be much lower.
– If you receive template taxation on your salary, the rules cannot be designed to tax as if you had received ten times your salary – that would be wrong.
Fears wide consequences
Special rules for the taxation of private consumption have been announced for a while, and many have taken the chance to reorganize the company’s structure for own parts.
But if the rules go through as they stand now, Banoun fears that it will affect people who make a living by renting out, for example, cabins. She points out, among other things, that assets will be taxed even when they are not in use.
She gives an example – if a company owns 100 rental cabins, and a private person owns more than 50 percent of the company – the owner will pay the tax that the person himself uses all 100 cabins at the same time during the period when they are not discharged.
– It is meaningless.
– Will hardly break human rights
Associate Professor Henrik Skar at the Faculty of Law at the University of Bergen disagrees that the proposed tax rules violate human rights.
– The Human Rights Court has professionally justified that the state has a very wide political leeway for taxation, and there are few cases where states have felt as a result of disproportionate taxation, says Skar.
He points to a case where Hungary was accused of human rights violations, an example Wiersholm also highlights in his consultation statement to the Ministry of Finance. In this case, the state had used tax rules to cut public wages for dismissed civil servants by taxing all income above a certain amount at 98 percent.
– This applies to a rather extreme case. The proposed Norwegian tax rules on private consumption in companies are not invasive and will hardly violate human rights, says Skar.
However, he agrees that the government’s proposal needs clarification.
– Several owners of property companies worry that they will be taxed during periods when the rental properties are empty due to maintenance needs, lack of demand or a change of tenants. The Ministry of Finance should specify that the proposed rules do not apply even if the rental properties are temporarily empty as long as the companies take real measures to promote property management.
The Ministry of Finance has submitted the criticism from Wiersholm. State Secretary Lars Erik Bartnes (Sp) does not want to comment on anything, beyond the fact that the government will go through the consultation opinion that has been received and make an overall assessment of the proposal.
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