If you are resident in Norway, you are obliged to report your assets in Pakistan. Your assets may consist of housing, land, commercial property, bank deposits, etc. If you have assets abroad, you must report this in your tax return. The fact that you are obliged to report does not automatically mean that you are obliged to pay tax.
It's a fairly simple process to report assets you own abroad. When you log in to altinn.no to make changes to your tax return, you will be able to enter real estate you own abroad, bank deposits in Pakistan, rental income from real estate, interest income, etc.
For real estate, section 4.6.1 is used, while for bank deposits you must use the form called RF-1231.
Wealth tax for residential property abroad is favorable. The capital value of homes is set at only 30% of the market value.
In order for you to be in a position to pay tax in Norway, your assets must exceed NOK 1,500,000 in 2019. If you are married, your wealth must exceed NOK 3,000,000. Wealth tax is paid on net wealth, which means that a full deduction is made for debt.
In the event that you exceed the above-mentioned wealth limits, you will pay 1% wealth tax.
You own a residential property worth 10 million rupees and have a mortgage debt of 1 million rupees. When calculating wealth tax on the residential property, the following calculation is made: The capital value of the residential property is set at 3 million rupees (30% of market value). A deduction of 1 million rupees is then made for the debt. In this calculation, 0.85% of 2 million rupees, which corresponds to 17,000 rupees, must be paid. At today's exchange rate, this corresponds to approximately NOK 1,000.
The example does not take into account whether you have other debts or assets. If you have other debt, regardless of whether it is in Norway or abroad, equivalent to 2 million rupees, you pay zero wealth tax in this example.
Bank deposit of 10 million rupees. The entire bank deposit is included in the wealth tax calculation. A 0.85% wealth tax is calculated on 10 million rupees, corresponding to 85,000 rupees. At the current exchange rate, this corresponds to approximately NOK 5,500.
In this example, the fact that you have other assets or debts is not taken into account.
Read more about Norwegian-Pakistanis' obligation to report their assets in Norway here.
As of September 30, 2018, the Norwegian Tax Administration has received information about Norwegians' bank deposits and financial affairs in Pakistan. It's not too late to rectify the situation after September 30, 2018. Save yourself from additional tax of up to 60% and a police report by correcting the situation today.
All Norwegians who are resident in Norway for tax purposes are obliged to report their income and assets, but they do not have an automatic obligation to pay tax in Norway on assets abroad. Norway has an agreement with Pakistan that ensures that you do not pay double tax. If you have not reported your income and assets in Pakistan, you should do so as soon as possible to avoid possible criminal tax and a police report.
It is impossible to give any concrete answers to this. Pakistan has developed an electronic register of all properties in Pakistan, but this is not yet fully operational. At present, it is therefore not easy to get an overview of Norwegian-Pakistanis' property in Pakistan. Other assets, such as savings in banks, funds, etc. will be easier for the tax authorities to gain insight into. In any case, you should report your income and assets, regardless of which asset the money is invested in.
Firstly, as a tax resident in Norway, you have a duty to report your income and assets in Pakistan. Secondly, very few people risk paying large sums of money for reporting their income and assets to the Norwegian tax authorities. Norway and Pakistan have a tax treaty from 1986 that prevents double taxation. Thirdly, you will be able to transfer money from Pakistan to Norway without the risk of additional tax and notification if your income and assets are reported in Norway.
If you are resident in Norway, all income and assets in Pakistan must be reported to the Norwegian tax authorities. This applies to property, housing, money in the bank, shares and other assets. Your assets must be entered in your tax return every year. The fact that the assets are entered in your tax return does not necessarily mean that you must pay tax on them. Read more about tax liability below.
No, due to the tax treaty between Norway and Pakistan, there is no automatic tax liability in Norway for everything you own in Pakistan. For example, if you have paid tax on rental income from a home in Pakistan, tax is not payable on the same rental income in Norway. However, the home is taxed as property in Norway.
There may be cases where there is a risk of both additional tax and reporting due to failure to report to the Norwegian tax authorities. Due to the tax treaty between Norway and Pakistan, those who have paid tax in Pakistan will in principle not risk additional tax or prosecution if a voluntary correction is requested.
Apply for voluntary correction with the tax authorities.
There is no full deduction for interest on debt, but there is a full deduction for debt.
Yes, it is completely unproblematic to transfer money from Pakistan to Norway. However, make sure that you have arranged your tax affairs in Norway before you transfer the money here.
Read more about reporting property in Pakistan to Norwegian tax authorities here.
Insa lawyers have recently assisted Norwegian-Pakistanis who want to sell their properties in Pakistan and bring the money back to Norway.
In this context, we have assisted clients with the following:
For those who have spent large parts of their lives in Norway, this type of process in Pakistan can appear very complicated and difficult. Therefore, it may be desirable for many to hand over responsibility for the entire process to a professional player based in Oslo. We can assist with everything from marketing and selling the property until the money is in your account in Norway.
When drafting sales agreements and deeds, it is important to remember that the money will be transferred to Norway. When transferring money, it will be necessary to document where the money comes from and why it should be sent out of the country.
In connection with the settlement, it is convenient to receive the money in an account in Pakistan. When transferring money to Norway, you will normally encounter a number of challenges. In our experience, the local banks normally reject a request to transfer money abroad, saying that this is only possible in connection with studies or for treatment of illness. Although there are severe restrictions on money transactions abroad, it is still possible to legally transfer money abroad. It is required that an application be submitted to the State bank to apply for permission to transfer the money first. Such an application must be submitted via a bank or foreign exchange company.
When choosing a foreign exchange company, we focus on how much money we can transfer, how quickly the transfer can be made and how much the foreign exchange company charges. Our clients have been satisfied with the company we use.
Some of the people who have assets in Pakistan have not reported this to the tax authorities. They can still do this without risking sanctions if the conditions for tax amnesty are met.
Do you have questions or need help in connection with the transfer of assets from Pakistan to Norway? Get in touch with usand we'll figure out the way forward together.
In our experience, many Norwegian-Pakistanis own property in Pakistan that has not been reported to the Norwegian tax authorities because they are afraid of being taxed. However, there is no reason to be afraid of reporting your property in Pakistan to the tax authorities. It is a myth that you will be heavily taxed for assets abroad. Nor is there an automatic tax liability for property you own in Pakistan.
This article provides information and specific advice on how to proceed if you want to transfer money from Pakistan to Norway after selling a property.
Yes, absolutely all property you own in Pakistan must be reported to the tax authorities. The reporting is done through your tax return. The reporting obligation applies to those who are considered resident in Norway for tax purposes. The fact that you report your property in Pakistan to the tax authorities does not necessarily mean that you are liable to pay tax.
You are obliged to report on the property, regardless of whether you have purchased, inherited or otherwise become the owner of the property. Whether you should pay tax on the property in Norway must be assessed on a case-by-case basis. If you have inherited the property, the date of inheritance is used as the basis for when you became the owner. If there is an ongoing inheritance dispute, your assets will only be equal to your share of the estate until the inheritance settlement is final.
For properties that have not previously had an asset value determined according to Norwegian rules, the asset value is set at a maximum of 30 percent of the market value abroad. Ask a real estate agent in the area to provide you with a valuation of the property, to the extent possible. Insa advokater can put you in touch with the right people in Pakistan if you wish.
In 1986, Norway and Pakistan entered into a tax treaty that aims to avoid double taxation. This means that if, for example, you have paid tax on the rental of the property in Pakistan, you will not pay tax on it in Norway. The same applies if you have paid tax on gains from the sale of the property in Pakistan. However, the value of the property will be included in the calculation of your wealth in Norway. You must pay wealth tax on this if your wealth is large enough.
If it turns out that you should have paid wealth tax in Norway or paid more wealth tax than you already do, you can request a voluntary correction (so-called tax amnesty). In 2023, spouses with assets of less than NOK 20 million will only pay 1% wealth tax on net assets above NOK 3.4 million. Single people with assets of less than NOK 20 million will pay 1% on net assets above NOK 1.7 million. 1.7 million.
Whether your property in Pakistan results in increased wealth tax must be assessed on a case-by-case basis. If you apply for voluntary correction, you risk paying late payment interest and wealth tax for the period you should have paid tax.
Conditions that are important to clarify: How long have you owned the property? Is the property rented out? Is tax paid on any rental income? What is the value of the property?
According to the tax treaty between Norway and Pakistan, if you have paid tax on the gain from the sale of property in Pakistan, you will not pay tax on it in Norway. If you have sold your holiday home in Pakistan and the sale has triggered capital gains tax in Pakistan, you will not pay tax on the property in Norway.
If no tax has been paid on the gain of a holiday home abroad, the sale is tax-free in Norway if you have:
Yes, it is completely unproblematic to transfer money from Pakistan to Norway. Make sure that your tax situation in Norway is in order before you transfer the money here.
Read more about the obligation of Norwegian-Pakistanis to report their assets in Pakistan to Norway, here.
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