Implications of the Wealth Tax on the Norwegian Stock Market

Details

Supervisors

Grégoire, Philippe

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

The Norwegian wealth tax has since 2017 experienced yearly changes to its valuation rules for stocks. Since an individual’s wealth is measured on the 1st of January each year, it can lead to tax mitigating strategies to be implemented. Owning stocks compared to cash leads to a lower measured wealth and a lower tax liability. The thesis investigates if the introduced valuation rules has led to different returns on the Oslo stock exchange. Theory suggests Norwegians prefer to own domestic and large cap stocks. Regressions are performed on data in two different periods. One period having the valuation discount (2023-2017) and the other without the discount (2016-2008). The periods are also divided between all companies and only large cap companies. The result from the regression tells there is no difference between the two periods for all companies. However, there is a difference when only large cap companies are included. The thesis therefore concludes there is a difference in returns for large cap companies when the valuation discounts is present. If the results can be explained by the valuation rules in the wealth tax will require more research.