When you receive a dividend or sell shares at a gain in Norway, you pay tax, but not on the whole amount. The shielding deduction ensures that the part of the return equal to a risk-free rate is tax-free. The idea is that only the return above what you could have earned without risk should be taxed as share income.
The deduction is calculated automatically for shares registered in Norway, but it is useful to understand how it works. It affects how much tax you actually pay, and when.
Who gets the shielding deduction?
The deduction applies to personal shareholders and covers:
- shares, both listed and unlisted
- equity certificates in savings banks
- the equity part of equity funds and balanced funds
- deposits in a share savings account (ASK)
Limited companies do not get the shielding deduction. They are taxed under the participation exemption instead.
How the deduction is calculated
The deduction for a year is the shielding basis multiplied by the shielding rate.
- The shielding basis is mainly what you paid for the shares, the cost price, plus any unused shielding from earlier years.
- The shielding rate is set by the Norwegian Tax Directorate in January after the income year, based on a risk-free interest rate. For the 2025 income year the rate is 3.6 per cent. The 2026 rate will be set in January 2027.
The deduction goes to whoever owns the share at the end of the year. If you buy a share in December, you get shielding for the whole year. If you sell it before New Year, you get no shielding for that year.
Worked example: dividends
You bought shares for NOK 100,000 early in 2025 and received NOK 5,000 in dividends during the year.
| Without shielding | With shielding | |
|---|---|---|
| Dividend | NOK 5,000 | NOK 5,000 |
| Shielding deduction (100,000 × 3.6%) | – | NOK 3,600 |
| Taxable dividend | NOK 5,000 | NOK 1,400 |
| Tax (× 37.84%) | NOK 1,892 | NOK 530 |
The effective tax rate of 37.84 per cent comes from multiplying share income by the adjustment factor of 1.72 in 2025 and 2026, and then taxing it at 22 per cent.
Unused shielding carries forward
If your dividend is smaller than the shielding deduction, the remainder is not lost. Unused shielding is added to the shielding basis and carried forward to the next year, for the same share. It can be used against future dividends, or against the gain when you sell the share.
Example: if you own a share that pays no dividend, unused shielding builds up year by year. When you sell at a gain, the accumulated shielding is deducted from the gain before tax.
What happens when you sell?
When you sell, unused shielding can be deducted from the gain. Two rules matter:
- Shielding cannot create or increase a loss. If you sell at a loss, the loss is deductible, but unused shielding is not added to it.
- Shielding follows the share. Unused shielding on one share cannot be used against a gain on another. If you sell all your shares in a company, any remaining unused shielding is lost.
Shielding in a share savings account
In a share savings account, shielding is calculated from the deposits in the account, not for each individual share. The deduction cannot exceed taxable withdrawals and dividends in the same year, but unused shielding carries forward. In practice, shielding in an ASK matters mainly when you withdraw more than you have deposited, or when you receive dividends.
Shielding on funds
For equity funds and balanced funds, shielding applies to the equity part of the fund. The interest-bearing part of a balanced fund gets no shielding, and its return is taxed as ordinary capital income.
Sources
- Norwegian Tax Administration: the shareholder model
- Nordnet: what is the shielding deduction (in Norwegian)
- Nordnet: what is the adjustment factor
Next steps
- See how AksjeNet calculates tax and shielding in your portfolio
- Read about the share savings account