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meanwhile Norway has started a controversial exit tax that can kill many tech startups: https://www.forbes.com/sites/danieladelorenzo/2024/04/09/norwegian-star

meanwhile Norway has started a controversial exit tax that can kill many tech startups: https://www.forbes.com/sites/danieladelorenzo/2024/04/09/norwegian-startup-scene-petitions-against-exit-tax-towards-tech-sector/ https://www.forbes.com/sites/danieladelorenzo/2024/04/09/nor...

diggan 2y ago
> When the natural interest for start-ups is to scale up and expand in foreign markets, or to leave the country to seek better deals, the proposed 37.8% exit tax on unrealized assets over $46.5 thousand that have been accumulated in Norway, seems to be the last drop for any foreigner or Norwegian with big dreams to set a business in the Nordic country. As prior art, doesn't the US have something similar where if you want to leave your residency/citizenship, you have to pay up, even for unrealized gains and such? Seems like Norway is modelling something similar to what the US already has, and the US seems to still have tech startups coming out of it.
- chaosprint 2y ago
  well. but these two countries are very different, so can't just copy paste policies.
- CalRobert 2y ago
  I think the difference is that the US is where you'd want to found your startup anyway.
  - diggan 2y ago
    If I imagine being Norwegian, I bet the answer to that question is "Nope" more than "Yes".
    - CalRobert 2y ago
      I dunno, even Norwegians like money.
      - diggan 2y ago
        I think a major difference between people from the US and people like me from the Nordics is that we don't prioritize money above everything else. Good work/life balance for example, is commonly more important for us, just like everyone having access to good healthcare is also more important. But of course, not everyone shares that view :)
        CalRobert 2y ago
        Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc. The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc. For what it's worth a good few of my friends are software engineers and now that we're in our 40's it's the Americans who have better work life balance, not me (the American who moved to Europe chasing better WLB but instead just making a ton less money)
        diggan 2y ago
        > Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc. Heh, funny that you just exemplified my "Americans care mostly about money" by only thinking about money/funding :) The startup/company culture might be a bit different in the Nordics compared to what you're used to. Many people just want to create a business that earns "well enough", then they're happy with that, rather than a "takeover the world" approach that is common in the US. > The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc. You do you! Personally I wouldn't feel ethically OK with that approach, as the country that raised you loses out until when/if you come back, and you're only moving to the US to make money, then leave with it, rather than retiring there. But, everyone has a different approach to life, there is no right or wrong, correct or incorrect, only what we feel is the right approach for us :) In the end I hope you live the life you want, just like me.
- HarHarVeryFunny 2y ago
  The US exit tax isn't a fixed penalty for leaving, but rather a way to wring "pending taxes" out of citizens renouncing their citizenship. Per the exit tax you pay taxes as if all your assets had been sold, thereby forcing security gains to be "recognized" at that point.
  - diggan 2y ago
    How is that different from the thing Norway might implement? Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company itself.
    - JumpCrisscross 2y ago
      > Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company That’s a big difference. (Also, is it company or personal residence?)
      - diggan 2y ago
        Sure, but also the least interesting because that difference is very obvious, that's why I'm asking for other differences...
        JumpCrisscross 2y ago
        > that's why I'm asking for other differences If the obvious difference explains the gap, this is unnecessary. Switch American taxation to a territorial system and you’d see a similar flourishing of start-ups and founders in Canada and Mexico.
    - HarHarVeryFunny 2y ago
      You're right - maybe it is the same - I don't read closely enough, but the Norwegian tax is on "unrealized assets" which may be the same thing.
shtopointo 2y ago
Weird that they would even consider that – Norway is so rich from oil and gas, it may be able to keep going without collecting any taxes.
- blackhawkC17 2y ago
  Taxes make a government accountable to citizens. While not paying taxes because of oil wealth might seem enticing in the short term, it'll lead to disaster in the long term if a government becomes accountable mainly to the resource industry and neglects to invest in a diversified, productive economy. Norway has high tax rates despite having oil wealth-- this ensures citizens remain productive and don't get too complacent by depending on a fluctuating commodity.
  - ninalanyon 2y ago
    The vast majority of oil tax revenue never enters the Norwegian domestic economy but is instead funnelled into the State Pension Fund (The Oil Fund) which invests outside the country. This means that the oil has little effect on inflation in the country. There is also a rule that only 3% or less of the fund can be used by the state in any one year. 3% is the expected real return so the fund should never shrink thus preserving the value for the future. Norway has successfully avoided the Dutch Disease. But whether we will be able to successfully negotiate the decline of oil in the long run remains uncertain.
ninalanyon 2y ago
A typical bit of Forbes scaremongering. According to the local the threshold for share gains is 3 million kr, about 300 thousand USD. You only pay the exit tax on amounts above that. "Those subject to the tax will have to address their tax obligations related to gains exceeding 3 million kroner on shares acquired during their time in Norway. They will have several options to fulfil this obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest. The changes are part of the government's efforts to counter the recent outflow of wealth from Norway, with Switzerland being a popular destination for tax exiles." https://www.thelocal.no/20241007/whats-the-latest-on-norways-plans-for-an-exit-tax https://www.thelocal.no/20241007/whats-the-latest-on-norways...
- dosinga 2y ago
  Yeah, but I think the point is that this applicable on unrealized capital gains too. So if I start a company in Norway, raise a bunch of money and then move to the US because the company wants to have a presence there, I now have to pay the tax on the basis of the money raised; It's quite common for a reasonable successful founder to be worth millions on paper while having no cash.
  - christkv 2y ago
    It is and the effect is immediate and destructive to any value creation in startups. It basically forces companies to leave before raising any serious money or founders will end up with tax bills that have to be paid out of investment money
    - consteval 2y ago
      Or just staying in the country, thereby bolstering their economy. Which is almost certainly the end goal. I mean, it kind of sucks if these countries provide the tools to create successful businesses and then those businesses just move to cheaper countries. You're kind of getting screwed over. Countries invest too. In their economy. Providing high quality education at a low price is a huge investment, for example. It's not a good deal if citizens take that and you don't get a return on your investment, i.e. they're not creating innovative companies in your country.
lostmsu 2y ago
This is exactly the reason why we crossed out Austria as destination. Not only they have an exit tax, they want to tax the unrealized gains since the purchase of the asset instead of since entry to Austria. I wish they'd fix that weirdness. Or just let people move between there and US without forcing asset sales at bad times to cover tax payments on unrealized gains.
robocat 2y ago
Why would anybody do unpaid sweat equity in founding a risky startup? A gamble that can only pay off if you were to win the startup lottery. The same issue in New Zealand. Anyone with a professional job invests $100k/year in lost wages founding their high risk venture. Lose taxes if you win. Lose 100% of your time if you lose. Hardly economically worth being a founder given expected return is so poor (worse than the standard figure of 90% businesses fail after 5 years). We don't have a capital gains tax yet in NZ but CGT means nobody sensible should found a startup by "investing" their time.

diggan 2y ago

> When the natural interest for start-ups is to scale up and expand in foreign markets, or to leave the country to seek better deals, the proposed 37.8% exit tax on unrealized assets over $46.5 thousand that have been accumulated in Norway, seems to be the last drop for any foreigner or Norwegian with big dreams to set a business in the Nordic country. As prior art, doesn't the US have something similar where if you want to leave your residency/citizenship, you have to pay up, even for unrealized gains and such? Seems like Norway is modelling something similar to what the US already has, and the US seems to still have tech startups coming out of it.

chaosprint 2y ago
well. but these two countries are very different, so can't just copy paste policies.
CalRobert 2y ago
I think the difference is that the US is where you'd want to found your startup anyway.
- diggan 2y ago
  If I imagine being Norwegian, I bet the answer to that question is "Nope" more than "Yes".
  - CalRobert 2y ago
    I dunno, even Norwegians like money.
    - diggan 2y ago
      I think a major difference between people from the US and people like me from the Nordics is that we don't prioritize money above everything else. Good work/life balance for example, is commonly more important for us, just like everyone having access to good healthcare is also more important. But of course, not everyone shares that view :)
      - CalRobert 2y ago
        Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc. The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc. For what it's worth a good few of my friends are software engineers and now that we're in our 40's it's the Americans who have better work life balance, not me (the American who moved to Europe chasing better WLB but instead just making a ton less money)
        diggan 2y ago
        > Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc. Heh, funny that you just exemplified my "Americans care mostly about money" by only thinking about money/funding :) The startup/company culture might be a bit different in the Nordics compared to what you're used to. Many people just want to create a business that earns "well enough", then they're happy with that, rather than a "takeover the world" approach that is common in the US. > The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc. You do you! Personally I wouldn't feel ethically OK with that approach, as the country that raised you loses out until when/if you come back, and you're only moving to the US to make money, then leave with it, rather than retiring there. But, everyone has a different approach to life, there is no right or wrong, correct or incorrect, only what we feel is the right approach for us :) In the end I hope you live the life you want, just like me.
HarHarVeryFunny 2y ago
The US exit tax isn't a fixed penalty for leaving, but rather a way to wring "pending taxes" out of citizens renouncing their citizenship. Per the exit tax you pay taxes as if all your assets had been sold, thereby forcing security gains to be "recognized" at that point.
- diggan 2y ago
  How is that different from the thing Norway might implement? Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company itself.
  - JumpCrisscross 2y ago
    > Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company That’s a big difference. (Also, is it company or personal residence?)
    - diggan 2y ago
      Sure, but also the least interesting because that difference is very obvious, that's why I'm asking for other differences...
      - JumpCrisscross 2y ago
        > that's why I'm asking for other differences If the obvious difference explains the gap, this is unnecessary. Switch American taxation to a territorial system and you’d see a similar flourishing of start-ups and founders in Canada and Mexico.
  - HarHarVeryFunny 2y ago
    You're right - maybe it is the same - I don't read closely enough, but the Norwegian tax is on "unrealized assets" which may be the same thing.

shtopointo 2y ago

Weird that they would even consider that – Norway is so rich from oil and gas, it may be able to keep going without collecting any taxes.

blackhawkC17 2y ago
Taxes make a government accountable to citizens. While not paying taxes because of oil wealth might seem enticing in the short term, it'll lead to disaster in the long term if a government becomes accountable mainly to the resource industry and neglects to invest in a diversified, productive economy. Norway has high tax rates despite having oil wealth-- this ensures citizens remain productive and don't get too complacent by depending on a fluctuating commodity.
- ninalanyon 2y ago
  The vast majority of oil tax revenue never enters the Norwegian domestic economy but is instead funnelled into the State Pension Fund (The Oil Fund) which invests outside the country. This means that the oil has little effect on inflation in the country. There is also a rule that only 3% or less of the fund can be used by the state in any one year. 3% is the expected real return so the fund should never shrink thus preserving the value for the future. Norway has successfully avoided the Dutch Disease. But whether we will be able to successfully negotiate the decline of oil in the long run remains uncertain.

ninalanyon 2y ago

A typical bit of Forbes scaremongering. According to the local the threshold for share gains is 3 million kr, about 300 thousand USD. You only pay the exit tax on amounts above that. "Those subject to the tax will have to address their tax obligations related to gains exceeding 3 million kroner on shares acquired during their time in Norway. They will have several options to fulfil this obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest. The changes are part of the government's efforts to counter the recent outflow of wealth from Norway, with Switzerland being a popular destination for tax exiles." https://www.thelocal.no/20241007/whats-the-latest-on-norways-plans-for-an-exit-tax https://www.thelocal.no/20241007/whats-the-latest-on-norways...

dosinga 2y ago
Yeah, but I think the point is that this applicable on unrealized capital gains too. So if I start a company in Norway, raise a bunch of money and then move to the US because the company wants to have a presence there, I now have to pay the tax on the basis of the money raised; It's quite common for a reasonable successful founder to be worth millions on paper while having no cash.
- christkv 2y ago
  It is and the effect is immediate and destructive to any value creation in startups. It basically forces companies to leave before raising any serious money or founders will end up with tax bills that have to be paid out of investment money
  - consteval 2y ago
    Or just staying in the country, thereby bolstering their economy. Which is almost certainly the end goal. I mean, it kind of sucks if these countries provide the tools to create successful businesses and then those businesses just move to cheaper countries. You're kind of getting screwed over. Countries invest too. In their economy. Providing high quality education at a low price is a huge investment, for example. It's not a good deal if citizens take that and you don't get a return on your investment, i.e. they're not creating innovative companies in your country.

lostmsu 2y ago

This is exactly the reason why we crossed out Austria as destination. Not only they have an exit tax, they want to tax the unrealized gains since the purchase of the asset instead of since entry to Austria. I wish they'd fix that weirdness. Or just let people move between there and US without forcing asset sales at bad times to cover tax payments on unrealized gains.

robocat 2y ago

Why would anybody do unpaid sweat equity in founding a risky startup? A gamble that can only pay off if you were to win the startup lottery. The same issue in New Zealand. Anyone with a professional job invests $100k/year in lost wages founding their high risk venture. Lose taxes if you win. Lose 100% of your time if you lose. Hardly economically worth being a founder given expected return is so poor (worse than the standard figure of 90% businesses fail after 5 years). We don't have a capital gains tax yet in NZ but CGT means nobody sensible should found a startup by "investing" their time.