- A convertible loan is treated as a debt claim (fordring) until conversion, not as shares, so it does not require setting a share valuation at the time of investment and is booked as a loan in the company.[1][2][3]
- For personal net wealth tax (formuesskatt), debt claims are included in taxable wealth at their fair value unless specifically exempt, and there is no general exemption for ordinary private loans to startups.[4][5]
- Upon conversion, the tax basis of the acquired shares is tied to the market value at the conversion date and the claim is regarded as realized, which then brings share valuation into play.[6]
- Investing via a convertible loan can defer the need to set a company valuation for issuing shares at the time of the initial financing, because the instrument is debt until conversion.[2][3]
- However, this does not in itself eliminate personal wealth tax exposure: a lender’s claim is an asset that forms part of taxable net wealth unless an explicit exemption applies, and Norway’s wealth tax applies to net wealth above thresholds with specific valuation rules and discounts for certain asset classes (not generally for private loan claims).[5][4]
- When the loan converts, the claim is treated as realized, and the entry value of the shares equals the market value at the conversion time; if the shares are valued at zero at conversion, the entry value is zero, according to administrative practice and case references cited by the Tax Administration.[6]
- Convertible loans are recognized as debt instruments, often split into liability and equity components under accounting standards; the liability remains debt until conversion/repayment.[3]
- Corporate law allows startups to raise convertible loans subject to general meeting approval and procedural requirements, making them a common tool to postpone pricing the equity round until a later event.[2]
- The Norwegian Tax Administration explains valuation discounts for certain assets in wealth tax, but these discounts concern specified asset classes (e.g., listed/unlisted shares, certain funds, property), and do not establish a broad exclusion for loan claims; taxable net wealth is computed after applicable discounts and debt offsets.[7][8][4]
- Tax rules on converting claims to shares: conversion is treated as realization of the claim; the shares’ basis equals the claim’s market value at the conversion date, and special rulings confirm zero value can apply if the shares’ market value is zero at that time.[6]
- Using convertible loans can legitimately postpone setting an equity valuation for issuance purposes, but it does not provide a blanket way to avoid wealth tax because the loan claim itself is typically part of taxable net wealth.[3][4][5][2]
- Specific personal circumstances, asset composition, valuation discounts applicable to other parts of one’s wealth, and thresholds can affect the final wealth tax outcome; tailored advice from a Norwegian tax advisor is recommended for structuring and documentation.[9][4]
Relevant guidance: Norwegian Tax Administration on wealth tax valuation discounts and mechanics; treatment of conversion of claims into shares; corporate and accounting treatment of convertible loans in Norway.[8][1][4][7][2][3][6]