Startup vs. Tax Increase – Thinking of Canceling Norway – E24

Fintech company Ztl has to pay the employer additional tax for almost all employees, even if they are far from profitable. This means the top manager is considering whether he should build a team in Sweden instead.

– The government says that those with the strongest back have to bear the brunt. I agree with that, but it’s not us, says Andreas Bjerke, managing director and co-founder of Ztl.

Fintech works with solutions that will provide better payment services to business customers.

He is supported by Pierk Lynn Westgaard-Halle, the visiting Tory parliamentary representative.

– If you tax companies that don’t make profits, it won’t be an incentive specifically for wanting to create something, wanting to hire more people and wanting to grow and develop, you say.

Frustrating tripping wires

The reason for the visit is that Ztl wants to explain how the new additional employer tax will affect them and similar businesses.

From the new year, a temporary additional rate of five percent was introduced for salary income over NOK 750,000. In the nearly five-year-old company, there are now 18 employees, most of whom have many years of industry experience.

Experience and competence mean that almost everyone at Ztl earns more than NOK 750,000, says the CEO. Thus, the start-up is a company that contributes relatively more to the “connection team where resource owners stand,” as Prime Minister Storr put it in Parliament at the end of March.

Bjerke doesn’t understand much of that.

– The order is completely wrong, we as a startup should lower the employer’s tax for the first five years, if any. He says it’s frustrating to be an entrepreneur when the government puts a stumbling block on people like us.

It has no expiry date

When Jonas Gahr Støre (Ap) appeared at Parliament Question Time on March 22, Conservative Party leader Erna Solberg challenged him on what he meant this additional employer contribution was temporary.

– I don’t have an appointment to give for that. But we say that it is temporary and that we will find a good way to abolish it gradually, the prime minister said.

At the same time, he defended Solberg’s criticisms by pointing to the need to cover significant additional expenses for Ukrainian refugees, the rearmament of defense and other consequences of Russia’s war of aggression.

– The seven billion that comes from the temporary employer’s contribution is a corporate contribution. It was essential not to have to make huge cuts to people’s welfare.

On a visit to Ztl, Lene Westgaard-Halle was not reassured by Støre’s answer.

– It’s been a long time since it was announced, but they still can’t answer when it will be cancelled. I suspect the answer is 2025, when Ap loses the general election.

Looking to Sweden

Ztl has great growth ambitions. Bjerke looks with envy at Sweden and its many tech successes, such as Klarna and Spotify.

– We want to show the Swedes that they can do the same from Norway. Basically, I don’t see any reason why we can’t do that. He says the basic conditions are basically the same.

Bjerke says the company is growing by tens of percent each month and therefore has to invest constantly.

Basically, we want to build an international company from Norway. We recruit from a global market, but creating good jobs in Norway is a strong motivation.

In the next few years, the plan is to broaden and hire what he describes as a “very deep core competency”. This means well-paid employees. When Ztl has to pay an additional employer tax, that creates uncertainty, says Bjerke.

– When we don’t know the cost of hiring in Norway, we think it might also be a good idea to hire abroad. To build core competency outside Norway.

– We see Sweden as an alternative, but we are also looking outside the Nordic countries.

Primarily large companies

Ztl is a member of Fintech Norway, which regulates more than 50 companies.

Chairman Alf Gunnar Andersen says many of them are now considering downskilling.

Investing in IT expertise in Norway will become very expensive. We are unfortunately experiencing government tax policy destroying the future prospects of many of our members and the IT industry in general, he says.

State Minister Lars Wangen (Sp) in the Ministry of Finance emphasized that the employer’s additional contribution came to cover extraordinary expenses in the state budget, “at the same time that spending must be reduced to avoid unnecessary interest rate hikes and to limit the rise in prices for individuals and companies.”

Statistics Norway estimates that it is large companies in high-paying industries that will be most affected by the temporary tax. It’s good that there are people who want to start new businesses, but I don’t quite agree with the definition of competence here. He writes in an email via the communications department that there are many good and qualified people in several important professions who earn less than NOK 750,000.