The housing scandal continues: Norway's prime minister's office and parliament at risk of tax evasion?

The housing scandal continues: Norway’s prime minister’s office and parliament at risk of tax evasion?

Both the Prime Minister’s Office and the Norwegian parliament probably should have paid employer’s tax for commuter housing to ministers and representatives. Parliament covers the politicians’ remuneration, and should therefore have paid an employer’s contribution of 14.1%, the newspaper Aftenposten writes.

Since 1997, the parliament’s administration has believed that it is okay to use housing at the place of residence in order to avoid taxes. They have not asked the politicians if they actually have expenses, which is what the Tax Administration has determined is the requirement for obtaining a tax exemption. Therefore, there may be significant sums of residual employer’s contribution.

Experts believe that the parliament has broken the law.

“Employers are responsible for the correct reporting, tax deductions, and to pay the correct employer’s contribution on an ongoing basis. The benefit of free housing was taxable for Ropstad, and then the Prime Minister’s office should have acted accordingly,” professor emeritus Arvid Aage Skaar told VG.

May have broken the law  

Therefore, he believes that the Prime Minister’s Office (SMK) may have broken the law, and this may also be the case for the parliament. Skaar has been a professor at the University of Oslo and a partner in the law firm Wiersholm and is a tax specialist.

“Unless the Tax Administration has misinformed SMK, SMK should have deducted tax for Ropstad on the benefit of free housing in 2020. In that case, SMK has violated the tax payment law. Failure to pay employer’s contribution is also a violation of the law,” Skaar said.

SMK has informed VG that they are in the process of paying the employer’s contribution in arrears. Parliament is reviewing its cases and also risks ending up with a large bill from the tax authorities.

Lawyer Bettina Banoun, who has previously been chair of the Norwegian Bar Association’s tax law committee, says it is uncertain whether the representatives in the parliament will be able to use rules for tax amnesty and voluntary redress. 

Misunderstanding of the rules has seldom been a basis for avoiding additional tax, but she believes the Tax Administration’s investigations will reveal whether there is anything in parliament’s practice that can be excused.

The investigation should be carried out by an independent committee

Professor Christoffer Conrad Eriksen, who works with public law at the University of Oslo, told Aftenposten that an external investigation should take place.

“Because the case involves the parliament’s own administration, parliamentary representatives, and to some extent the government, the investigation should be carried out by an independent committee appointed by parliament, as has been done on other occasions.”

He warns that the case may weaken confidence in politicians and that a thorough investigation should therefore be conducted.

“There may be speculation about the reasons why the practice has slipped (under the radar). Among other things, there is a risk that questions will be asked as to whether there has been a desire on the part of anyone to expand the advantages that ministers and parliamentary representatives have.”  

Source: © NTB Scanpix / #Norway Today / #NorwayTodayNews

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