Norway has since the beginning of 2010 decided to tax pension with 15% tax before disbursement to recipients outside the country.
The organization Emigrant1 finds this to be a violation of international treaties, among others, the Convention for the Protection of Human Rights and Fundamental Freedoms.
Together with a Norwegian organization, APTRT (Aksjonsgruppen for pensjonisters og trygdedes rettigheter i Thailand) the Emigrant1 has established a special department, Norsk Pensjon-og Skatteråd Utland (NORSKAUT) now preparing a legal investigation and a possible lawsuit against the Norwegian government.
“It hurts us that we must take action against our country, but the situation is so blatantly wrong and unfair that we feel compelled to fight with all legal means,” says Arthur Sandberg, head of Emigrant1.
Apart from Norwegians in Thailand, the decision affects also Norwegians living in other countries where the authorities do not tax pension as an income.
The Norwegian/Thai Tax Treaty
A tax treaty was signed in 2003 between Norway and Thailand in order to avoid double taxation of the same income in both countries. In Norway the treaty ensures that the pension become taxed either in Thailand or in Norway at the same rate as in Norway.
“We have no understanding that the Norwegian authorities manage the agreement in such matters”, says Sandberg and continues,
“We experience that we are being dismissed by the Norwegian authorities by letters not answered and nothing is done at all to simplify the documentation and paperwork. We do not find that Thailand has officially changed a comma in the agreement with Norway since 2003. ”
According to Sandberg only Norwegian mid-level bureaucrats has being involved in the new 15% tax withdrawal. The communication between the Revenue Department in Thailand and the Norwegian Ministry of Finance seems to be settled through private e-mails between bureaucrats and not by regular documents.
Sandberg finds that the Norwegian taxation steals from poor countries such as Thailand.
He says: “The only thing that Thailand achieves is that hundreds of Norwegians will leave Thailand and move back to Norway. Because people with low-and middle pensions are in fact tax-free people in Norway.”
Double taxation or not
Skatt nord does not agree that the 15% tax on pensions is double taxation.
“If the citizen shows eligible documents, proving he is a taxpayer in Thailand and that the pension is taxed, then he will be granted exemption from withholding tax in Norway. There appears no such thing as double taxation”, says Arvid Jansen, førstekonsulent i Kildeskatt på pensjon at Skatt nord.
But this is not the case according to Sandberg, he says:
“We see a large number of Norwegians who live abroad-and they are affected by the fact that their pension has been pre-drawed all through 2010.”
The German way
Arthur Sandberg suggest the German approach to the subject. The German model which is the OECD’s Model Agreement, has made things much easier for their elderly and disabled people who move to warmer locations. When an emigrant holds a “Certificate of Residence” then the person will no longer have to pay tax in Germany as long as he is living outside Germany. But this is not an option for Norwegians, Sandberg says:
“Norway is a paying member of the OECD since 1960. It´s strange that Norway does not accept the OECD’s documentation schemes.”
Sandberg does not want to go into further details about the preparation of any lawsuit against Norway.