New tax rules for onshore wind power production

The Government’s proposal for new tax rules for onshore wind power production – all with effect from 1 January 2023 – involves the following:

New tax rules for onshore wind power production

Increased production tax:

  • Proposed from current 1 øre per kWh to 2 øre per produced kWh
  • Deductible in resource rent tax (NOK for NOK)
  • Payable regardless of profit/loss
  • Paid in full to the host municipality

Natural resource tax:

  • A new production tax at 1.3 øre per produced kWh
  • Deductible in resource rent tax (NOK for NOK)
  • Payable regardless of profit/loss
  • Paid to the “income equalization system”, i.e. divided between all municipalities and counties

Resource rent tax:

  • A new “super profit-tax” similar to what already applies for hydropower production
  • Tax rate: 51.3% – but effectively 40% since income tax assessed on the same tax base is deductible
  • Calculation of tax base:

            Gross income:

  • Spot price (per production hour) of power produced, with the exception for
  • Produced power sold under fixed-price PPA’s signed prior to 28 September 2022
  • Produced power sold under specific contract types (to be further specified)
  • Income from sale of Guarantee of Origins and of Electricity Certificates           

            Deductible items:

  • Operating expenses (as defined by the ordinary income tax rules)
  • Depreciation and amortization of operating assets acquired before YE 2022 (as defined by the ordinary income tax rules)
  • Investments in operating assets acquired 2023 or later (full deduction in year of acquisition)
  • Negative tax base / tax loss from earlier years
  • Income tax assessed on the same tax base
  • Production tax and natural resource tax payable
  • Paid to the State, but with a share apportioned to the municipalities through the framework subsidy system

High-price contribution:

  • A new production tax at 23% on power sold at prices in excess of 70 øre per kWh, adjusted for gain/loss on hedging contracts
  • Based on price actually earned, i.e. PPA-price / contract price if not sold spot
  •           Arm’s length rules will apply
  •  The contribution not deductible in other taxes or tax bases (ordinary income tax, resource rent tax, property tax)
  • Payable regardless of profit/loss
  • Paid in full to the State

Ordinary income tax:

  • No specific changes proposed (yet)

The proposals will be referred for public consultation before the end of the year. We expect that the Government will be able to collect sufficient support by Parliament to ensure enactment with effect from 2023, in full or broad parts.

Contact us