Document duty

Document duty (dokumentavgift) is a state duty that falls due on registration of the transfer of legal title to real property. The duty is 2.5% of the sale value and is paid by the buyer on transfer. For most home purchases, the document duty is the largest single cost on top of the purchase price, and an item that developers and estate agents must include in the total cost early on.

The legal basis is the Document Duty Act of 1975, supplemented by the regulations on document duty. The duty is triggered the moment the title document (typically a skjøte, a deed of conveyance) is registered in Grunnboken at Kartverket. Skatteetaten (the Norwegian Tax Administration) is the duty authority, while Kartverket collects the amount as part of the registration.

The basis is the sale value of the property at the time of transfer. For a purchase in an open market, this is normally the purchase price. For a gift, inheritance or other non-voluntary transfers, the basis is set on a discretionary basis at the assumed market value. For plots with planned development, the duty is usually calculated on the raw plot value, not on the expected completed project value.

The Act and the associated annual resolution from the Storting give several important exemptions and special rules. Section 8 of the Document Duty Act exempts, among other things:

• Inheritance: a spouse takes over free of duty, and an heir pays no duty on their statutory share of the estate. Cohabitants, by contrast, are exempt only for a shared home (address in the National Population Register at the time of death), not for a holiday property or other property. Inheritance under a will beyond the statutory share triggers document duty.
• Gift between spouses, and transfers out on divorce or separation.

In addition, exemptions under the duty resolution and practice apply to:

• Transfer of title in a borettslag (housing co-operative) on the purchase of a share flat, a borettslag is not real property within the meaning of the Act.
• Company changes without an actual transfer (conversions, mergers, demergers, pure name changes).
• The first registration of a new building on your own plot where the building is financed and erected by the plot owner.

For commercial property, it is common to structure a sale as a share transaction instead of a property transaction. When the property company itself (a single purpose vehicle, SPV) is sold, the registered owner in Grunnboken does not change, only the shareholders in the company. Document duty is then not triggered, because no transfer of title takes place within the meaning of the Act. The structure is one of the main reasons why Norwegian commercial property is typically held in company structures rather than owned directly by the investor.

The duty is a significant cost. On a home purchase of 8,000,000 kroner, the document duty comes to 200,000 kroner, in addition to the registration fee. Together with any financing of the purchase (with a mortgage deed that is also registered, but where the mortgage fee is far lower), these costs make up a large part of the final cost. The state's annual income from document duty is around 13 to 15 billion kroner and varies with the property market.

Attempts to avoid document duty through artificial company constructions can be caught by the anti-avoidance rule in section 13-2 of the Taxation Act. Skatteetaten tests the borderline cases on an ongoing basis, particularly where a share transaction in a property SPV is combined with a short holding period before resale.

In Placepoint, the property panel shows the registered registered owner and the transfer history. The document duty amount itself is not public per transfer, but it can be estimated from the sale price and the form of transfer.

How it looks in Placepoint

In Placepoint you find this in the property panel:

From Placepoint's glossary: Document duty

More information: Skatteetaten: Dokumentavgift, Lovdata: Dokumentavgiftsloven, Kartverket: Tinglysingsgebyr, Store norske leksikon: dokumentavgift

English: Stamp duty on conveyance of real property (Norwegian-specific transfer tax, 2.5%).

Frequently asked questions

What is document duty?

Document duty is a state duty of 2.5% of the sale value, paid on registration of the transfer of legal title to real property. It is the largest single cost on top of the purchase price when buying a home in Norway.

Who pays the document duty?

The buyer pays the document duty. The amount is collected by Kartverket at the same time as the deed is registered, and passed on to Skatteetaten, which is the duty authority.

When is there an exemption from document duty?

The main exemptions apply to inheritance between spouses, gifts between spouses, transfer of title in a borettslag, and company changes without an actual transfer. A share transaction in a property company also does not trigger document duty, because the legal title does not change.

Why is commercial property often sold as a share transaction?

In a share transaction in a property company, the registered owner in Grunnboken does not change, only the shareholders. That does not trigger document duty, and it is an important reason why Norwegian commercial property is typically held in SPV structures rather than owned directly.

How much is the document duty on a home?

The document duty is 2.5% of the sale price. A home purchase of 5,000,000 kroner gives 125,000 kroner in document duty; one of 10,000,000 gives 250,000 kroner. The registration fee comes in addition, but it is a fixed low amount.