When a company earns money and sends part of the profit to you, we call it a dividend. But before you can spend the money, the tax authorities want their share. Understanding how dividend tax works is essential for building wealth.
"Whatever you send out, returns to you."
— Florence Scovel Shinn
Your investments send cash back to you, but in Norway, the tax rate on dividends for individuals is significant. Fortunately, there are completely legal systems to defer or reduce this tax.
Share Savings Account (ASK) as a shield
Tax deferral: If you receive dividends from a company in a Share Savings Account (ASK), you do not pay tax until you take the money out of the account. You can therefore reinvest the entire dividend tax-free!
Smart tips
- Always use ASK for Norwegian and European dividend stocks to get tax deferral.
- Remember that you get a shielding deduction every year which reduces the taxable part of the dividend.