The principle is that income which a shareholder receives from a money market fund (interest/sales) will be taxed at a rate of 22 percent (for the 2023 income year). Income from basic equity funds (equity fund dividends/sales) has an effective tax rate of 37.84 percent. 

When you receive income from a combination fund (a fund which includes both shares and other securities), the income figure that is used for taxation purposes will be split between an interest income component and a share income component.

Taxation of distributions

Whether distributions are taxed as interest income or share dividends depends on the fund's ratio of shares at the start of the income year.

• If the ratio of shares in the fund at the start of the income year is more than 80 percent, all distributions from the fund shall be taxed as share dividends. 
• If the ratio of shares in the fund at the start of the income year is less than 20 percent , all distributions from the fund shall be taxed as interest income.
• If the ratio of shares in the fund at the start of the income year is between 20 percent and 80 percent, the distribution is split into one part that is taxed as share dividends and one part that is taxed as interest income.

Example:

You have 200 units in a combination fund that, at the start of the income year, had 70  percent invested in shares and 30 percent in other securities. The fund distributes an interest return to the unit holders of NOK 10 per unit.

You receive NOK 2,000 from the fund.

NOK 1,400 is taxed as share dividends.
NOK 600 is taxed as interest.

Share dividends can be reduced by earned deductions for risk-free return.

Taxation in the event of sale and other realisation

The rules mean that the exemption method and the shareholder model only apply to the part of the realisation gains that are considered to relate to the share component of the fund. To determine the share component, one needs to find the average of the ratio of shares in the year of the purchase (acquisition year) and the year of the sale.

Deduction for risk-free return

The deduction for risk-free return reduces the tax on share income from mutual funds. The deduction for risk-free return equals the basis for deduction for risk-free return times an annually determined risk-free interest rate.

Basis for deduction for risk-free return

The basis for deduction for risk-free return consists of input value + unused deduction for risk-free return from previous years.

What will be the basis for deduction for risk-free return for units in mutual funds acquired before 7 October 2015?

You purchased 100 units in a bond-only fund for NOK 100,000. The basis for deduction for risk-free return will be NOK 0.

You purchased 100 units in a share-only fund for NOK 100,000. The basis for deduction for risk-free return will be NOK 100,000.

You purchased 100 units in a combination fund for NOK 100,000. The basis for deduction for risk-free return will be NOK 100,000. (Combination fund here refers to a mutual fund that has invested in at least one share.)

What will be the basis for deduction for risk-free return for units acquired in the period 7 October 2015 - 31 December 2015?

The basis for deduction for risk-free return constitutes the actual ratio of shares in the mutual fund on 1 January 2016.

Example:

You purchase 100 units for NOK 100,000 in a mutual fund in November 2015. At 1 January 2016, the fund is invested 90% in shares and 10% in fixed income securities. The basis for deduction for risk-free return will be NOK 90,000.

What will be the basis for deduction for risk-free return for units acquired starting in 2016?

This is calculated on the basis of the ratio of shares at the start of the income year.

If the ratio of shares in the fund at the start of the income year is more than 80%, the basis for deduction for risk-free return will equal the input value.

If the ratio of shares in the fund at the start of the income year is less than 20%, the basis for deduction for risk-free return will equal NOK 0.

If the ratio of shares in the fund at the start of the income year is between 20% and 80%, the basis for deduction for risk-free return will equal the share ratio.

Example 1:

You purchase 100 units for NOK 100,000 in a mutual fund in November 2016. At 1 January 2016, the fund is invested 90% in shares and 10% in fixed income securities. The basis for deduction for risk-free return will be NOK 100,000.

Example 2:

You purchase 100 units for NOK 100,000 in a mutual fund in November 2016. At 1 January 2016, the fund is invested 10% in shares and 90% in fixed income securities. The basis for deduction for risk-free return will be NOK 0.

Example 3:

You purchase 100 units for NOK 100,000 in a mutual fund in November 2016. At 1 January 2016, the fund is invested 50% in shares and 50% in fixed income securities. The basis for deduction for risk-free return will be NOK 50,000.

For more information on the taxation of share income, see the article on the shareholder model.

The tax return

If you own units in a Norwegian mutual fund, the taxable amounts will normally be pre-completed in the tax return.

If you own units in a foreign mutual fund that are not pre-completed in the tax return, you need to calculate the taxable amount yourself and enter it in the tax return.