Pakistan-related matters

Inheritance settlementafter death in Norway, where the deceased has assets in Pakistan: This article explains the process of transferring assets to you as an heir after the death of a person who has assets in Pakistan but is resident in Norway.

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1. Authorization to initiate a succession settlement

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The first thing you need to do is to write a power of attorney; you need to write a "Special Power of Attorney" to the person who will follow up the case in Pakistan. Our lawyers in Pakistan act as proxies if we get the assignment. In particularly challenging cases, our lawyers in Norway are engaged as proxies who then travel to Pakistan in connection with the settlement of the inheritance. If there are several heirs, they should agree on one representative.

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2. Obtain documentation on assets and liabilities

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The next thing to do is to obtain all documentation showing all assets and debts the deceased had in Pakistan. In addition, you will need to obtain documentation confirming that the deceased was the full or partial owner of the assets included in the inheritance settlement. The most common assets are real estate and/or money in a bank account.

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3. Death certificate and list of heirs

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If the deceased was resident in Norway, you must obtain a death certificate and a list of heirs. This is issued by the Norwegian courts in the municipality where the deceased was resident.

4. Initiate legal proceedings

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Once the power of attorney is in place, a legal process must be initiated before the appropriate court to obtain a "Certificate of Succession". This judicial process takes place over a period of 4-6 months and a corresponding number of court hearings. Before issuing the said certificate, the court will decide who the heirs are and how much each heir is entitled to in the inheritance settlement.

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5. Security in connection with the settlement of inheritance

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Following the court's assessment of the evidence, a "Secession Certificate" is issued which the heirs can use to have property/money transferred to them. Before the court allows the actual transfer, it is always conditional on the provision of a security. The amount of the security depends on the size of the estate. The security should cover any claims in the event that an inheritance settlement is incorrect.

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6. Closure

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The actual transfer of the properties is not carried out by the court, but by the public property authorities. As for money, this is released by the bank.

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If you have any questions about the content of this article or would like assistance in connection with an inheritance settlement where the deceased has assets in Pakistan, you can contact us without obligation here.

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Reporting ofassets in the tax return

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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.

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How to report residential property and bank deposits in Pakistan in your tax return?

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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.

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For real estate, section 4.6.1 is used, while for bank deposits you must use the form called RF-1231.

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Wealth tax for residential property abroad is favorable. The capital value of homes is set at only 30% of the market value.

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How much tax do you have to pay when reporting wealth in Pakistan?

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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.

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Example of the tax effect of housing in Pakistan:

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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.

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Example of bank deposits:

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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.

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Read more about Norwegian-Pakistanis' obligation to report their assets in Norway here.

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Despite the political unrest, there are major investment opportunities in Pakistan. With a population of over 220 million people, there are large markets for various business activities such as retail, restaurants and hotels, real estate, education and healthcare, etc.

Investors from abroad, such as Norway, may face various challenges when starting a business in Pakistan.

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Firstly, the business must normally be run through an enterprise. There are several different company forms to choose from. The most common is the Private Limited Company. This form of company is the closest thing to a Norwegian limited company. The company must be registered in accordance with Pakistani law and it is required to prepare and submit a Memorandum of Association and Articles of Association. In addition, the company is required to have two "Directors". Once the company is registered, bank accounts are established and an accountant must be engaged.

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The necessary public permits must then be obtained for the business in question. For example, if you want to start a private school, you must apply for registration with the Ministry of Education. This requires the following:

- Approved map of the school building

- An attested Affidavit showing name of school, level, owner's name

- Copy of Rent deed / Ownership deed

- Printed Prospectus and Admission Form

- Teachers Appointment order and their Testimonials

- Building Fitness Certificate from registered engineer or registered architect

- Hygienic Condition Certificate from DHO, Health Department

- Rules & Regulations of the Institution

- Memorandum of the Association in case of Registered Body

- Registration Certificate in case of NGO / Association / Body / Registered by Authority Joint Stock / Social Welfare Department

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Similarly, it may be necessary to register other types of businesses.

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Insa advokater assists clients in registering companies, applying for the necessary permits, registering businesses and obtaining the necessary documentation and certificates. In addition, we assist investors with tax matters and marketing. Contact us free of charge here.