Resource rent tax on onshore wind power

As of the 2024 income year, owners of wind power plants with more than five wind turbines or a total maximum installed capacity under a licence of one MW or more must pay resource rent tax to the state.

The regulations came into force on 1 January 2024.

The basis for calculating the resource rent tax is called resource rent income. Information related to the calculation of resource rent income must be provided in the tax return for the 2024 income year.

Resource rent tax liability is in addition to tax on ordinary income.

The wind power industry has exclusive access to valuable areas for commercial activities that can provide an extraordinary return. One of the reasons behind resource rent taxation is that the community should receive a share of this return.

Who does it apply to?

The rules on resource rent tax apply to owners of onshore wind power plants in Norway. The person who owns the wind power plant, or a share of it, is liable to pay resource rent tax.

The owner of the wind power plant is the one who has the most significant ownership rights, such as:

  • the right to sell or prevent the sale of the power plant, use it as collateral/security, participate in further development
  • the right to determine production volume and production time
  • the obligation to cover investment and operating costs

Unit of calculation

The individual wind power plant is the unit of calculation for the resource rent tax. The resource rent income is determined separately for each individual wind power plant. If the company owns several wind power plants, it must report resource rent income for each plant.

 

Resource rent tax liability on the production of wind power arises when a wind power plant has more than five wind turbines or a total maximum installed capacity under a licence of one MW or more.

When assessing whether the conditions for resource rent tax liability are met, it is crucial to determine whether the generators or wind turbines are part of the same wind power plant.

A wind power plant can consist of one or more wind turbines and associated electrical equipment for production, such as:

  • internal electrical systems (cables or overhead lines)
  • in-house transformer plants and production lines
  • other structural engineering structures
  • management and monitoring facilities

To determine what is considered to be one and the same wind power plant, you must consider whether the areas in question naturally form one planning area and whether there will be common infrastructure, roads, and grids. It may also be relevant to assess ownership, but it is not decisive.

What the enterprise must do

Enterprises liable for resource rent tax must assess resource rent income in the tax return and the business specification. You must report resource rent income even if it is negative.

Calculating resource rent income

You calculate resource rent income by determining gross resource rent income and subtracting the costs.

+ The sum of the year's spot market prices per hour multiplied by the actual production at the power plant during the corresponding time periods.

There are exceptions for some types of contracts, so the production volume in the contract should be valued at the contract price or hedged price. You can find information about the exceptions further down the page.
+ Gain on divestment of fixed assets used for wind power production
+ Subsidies for the production of new wind power
+ Income from issued electricity certificates
+ Income from issued Guarantees of Origin (GoO)
= Gross resource rent income
- Operating costs that regularly follow from wind power production
- Property tax for the wind power plant
- Tax depreciation of fixed assets connected to wind power production (investments before 2024)
- Deferment interest (compensation for having to recognise investments from before 2024 as deductions over time)
- Costs incurred during construction
- Investment costs from 2024 onwards that would otherwise be subject to capitalisation
- Specially calculated company tax
= Resource rent income for the year (before deduction for previous years' negative resource rent income)

Gross resource rent income

Gross resource rent income must be calculated on the basis of actual production of power in the wind power plant hour by hour, multiplied by the associated spot market price determined by Nord Pool AS.

Valued at contract price

Power supplied at a price other than the spot market price can be valued at the contract price when specific conditions are met. This applies to agreements on:

  • power delivered under a purchase contract entered into before 28 September 2022
  • power delivered to electricity suppliers in accordance with a long-term fixed-price contract, and which is delivered in accordance with a standard fixed-price agreement in the end-user market (standardised fixed-price agreements)
  • power delivered in accordance with a purchase contract entered into in the period 2024 to 2030, and which is connected to projects established in the period 2024 to 2030

If the enterprise owns a combination of hydropower plants and wind power plants, if it owns several wind power plants, or if it is part of a tax group with companies that own wind power plants or hydropower plants, the deliveries must be distributed among the various plants according to further rules.

If the agreement is terminated early, the gain or loss will be included in the resource rent income.

Hedged price

Power that is delivered at spot market price, but which is financially hedged according to an agreement entered into before 28 September 2022, is valued at a hedged price.

The enterprise finds the hedged price by valuing the power at spot market prices in those hours and with the volume the plant produces. Each year thereafter, the enterprise must calculate the gain or loss on the financial hedging related to the market development for electric power for the income year. The gain or loss must be added to or subtracted from gross resource rent income.

If the enterprise owns several wind power plants or is part of a tax group with a company that owns wind power plants, the gain or loss must be distributed among the wind power plants in accordance with specific rules.

If the agreement is terminated early, the gain or loss for the income year and the remaining hedging period must be included in the resource rent income for the income year.

Other income included in resource rent income

  • gain on divestment of fixed assets used for wind power
  • production subsidies for the production of new wind power
  • income from issued electricity certificates
  • income from issued Guarantees of Origin (GoO)

Deductions when calculating resource rent income

The taxpayer is entitled to a deduction from gross resource rent income for operating costs related to the wind power production.

Examples:

  • wages and other personnel costs for persons associated with the wind power production
  • maintenance costs
  • insurance costs
  • administrative costs
  • compensation to landowners and licensees for lost income from activities other than wind power that must cease in whole or in part upon the establishment of the wind power plant
  • losses on the divestment of fixed assets used in wind power production (and which are not covered by the cash flow tax)
  • costs of feeding power to the grid
  • costs for removing wind power plants and restoring areas according to the terms of the licence

Examples:

  • sales, transfer, and financial costs
  • costs for the purchase of land or other benefits to, for example, landowners or the municipality

The enterprise is only entitled to a deduction from the resource rent income for costs that are related to the actual wind power production. This means that the enterprise cannot necessarily claim a deduction for a cost from the resource rent income, even if the same cost entitles the enterprise to a deduction from ordinary income.

Costs that benefit the production of several wind power plants, or that benefit both wind power production and other activities, must be distributed according to specific rules.

Deductions for investment costs from resource rent income are treated differently depending on whether the investment was made before or after 31 December 2023. For investments from 1 January 2024, the cash flow tax applies, which means that the enterprise receives a direct deduction for the investment cost.

Investments before 1 January 2024 will be deducted through depreciation.

Cash flow tax

The resource rent tax on wind power is a cash flow tax. When the enterprise calculates resource rent income, it can directly deduct investment costs that can be capitalised in ordinary income.

For the enterprise to be entitled to a direct deduction for the investment cost from the resource rent income, the cost must be linked to the power production. The right to deduct applies to both depreciable and non-depreciable assets.

Examples of costs for a wind power plant that can be deducted directly:

  • foundation
  • tower
  • wind turbine
  • cabled installations or transformer stations
  • service buildings
  • construction roads
  • parking sites

Examples of costs that cannot be deducted directly:

  • the purchase of an existing wind power plant
  • the purchase of land property or other benefits to, for example, landowners or municipalities

The investment cost can be deducted directly from the resource rent income in the year in which the investment becomes subject to the capitalisation obligation in ordinary income.

Depreciations

For investments that are subject to the capitalisation obligation before 1 January 2024, the cash flow tax does not apply. The enterprise is entitled to a deduction for such historical investment costs through depreciation and deferment interest. A prerequisite for deduction is that the investment is connected to wind power production.

Special rules apply to the calculation of the depreciation basis for existing fixed assets in the resource rent income. The enterprise can depreciate the fixed assets by equal amounts over five years.

  • property tax for the wind power plant
  • deferment interest on fixed assets that are depreciated
  • specially calculated company tax

Rates and key figures

The Norwegian Parliament, the Storting, stipulates the tax rates for resource rent income every year.

For 2024, it is set at 32.1 percent. Since a deduction is given for resource rent-related company tax, the effective tax rate will be 25 percent.

Deductions for production fee

Tax on onshore wind power (production fee) will be deducted from the assessed resource rent tax at the wind power plant.

Negative resource rent income

If the deductions are higher than the gross resource rent income, the resource rent income will be negative. The negative resource rent income is carried forward with interest and will be deducted from next year's calculated resource rent income for the wind power plant.

 

For new wind power plants, the tax value of the negative resource rent income is paid when the plant is put into operation and the Tax Administration has carried out an inspection of the assessed tax. The scheme is subject to clarification with ESA.

Supporting documentation

You must keep your vouchers and other supporting documents, but you do not have to include any attachments in the tax return. If the Tax Administration needs more information, we’ll contact you. 

Legal sources

The Tax Administration’s guide Skatte-ABC: On resource rent tax on onshore wind power (K-5 Power companies – onshore wind power) (in Norwegian only).

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