Tax and Duties
Shielding Deduction: How it Works for Shares
See what the shielding deduction is, how it's calculated, and how unused shielding can affect tax on dividends and share gains.
2 min read · Translated from Norwegian. Read the original
The shielding deduction (skjermingsfradrag) reduces the portion of share dividends or gains that is taxable for individual shareholders. Its purpose is to shield a calculated risk-free return. These rules must not be confused with the exemption method (fritaksmetoden) for corporate shareholders.
How the deduction is calculated
The main formula is the shielding basis (skjermingsgrunnlag) multiplied by the shielding rate (skjermingsrente). The shielding basis is normally the share's acquisition cost, including direct costs related to the purchase. The shielding rate is determined after the income year.
Skatteetaten (the Norwegian Tax Administration) calculates the shielding per share owned at the end of the income year. Therefore, the data foundation must be correct for purchases, sales, inheritance, gifts, splits, reverse splits, and capital changes.
Unused shielding
If the dividend is lower than the available shielding, the unused amount can normally be carried forward for that particular share. This can reduce subsequent dividends or gains. The shielding follows the share and cannot simply be transferred to other shares.
A simple example
If a share has a shielding basis of 100,000 Norwegian kroner and the relevant shielding rate is set at 2 per cent in a purely illustrative example, this year's shielding will be 2,000 Norwegian kroner. Always use the official rate for the correct income year.
On Proffi
Proffi can explain ownership structure and company data, but should not display personal shielding as a public company fact. A calculator must allow the user to enter private values locally, specify the income year, and show the assumptions.
Source
Frequently asked questions
- Does shielding apply to all shareholders?
- This article describes the shareholder model (aksjonærmodellen) for individual shareholders. Companies may be covered by different rules.
- When is the shielding rate determined?
- It is determined in January of the year following the income year.
- Can unused shielding be used later?
- Yes, normally on the same share according to current regulations.