10.12.2015
Carried interest accepted as earned by key managers’ personal companies
Norwegian tax authorities had taxed key managers as if they had earned the carried interest personally as employment income. In a landmark judgment the Norwegian Supreme Court has ruled in favour of the taxpayers in the Herkules case, accepting their claim that carried interest profit share should not be taxed as employment income but instead should be taxable at the level of the individuals’ personal companies.
The Supreme Court has thereby overruled the Court of Appeals, which had concluded that the carried interest profit share was linked to services provided by employees and therefore should be treated as taxable income for those employees. This means that the carried interest should be taxed at 28% at the hands of the personal companies rather than at 47.8% at the hands of key managers and without triggering employer’s social security contribution at 14.1%.
