Nova Sea's tax liability quadruples after 'salmon tax'

Norwegian salmon company Nova Sea said the tax liability it has received from the authorities for the fiscal year 2023 quadruples that received in 2022. The company based in Lovund, Northern Norway will have to pay a total of NOK 847 million (EUR 74.12 million / USD 80.11 million) of which slightly less than half, NOK 400 million (EUR 35 million / USD 37.83 million), is related to the new ground rent tax.

"We absolutely pay our taxes gladly"

From the moment the talk of the so-called 'salmon tax' began, Nova Sea wanted to make it clear that it was willing to contribute more taxes to the community, but it also always stressed that it did not agree with the proposed system.

Now that it is time to make the first payment with this new form of taxation, the company reiterates its disagreement with the method used which, according to Nova Sea's CEO, Tom Eirik Aasjord, "very much contradicts the principles we previously had for tax policy in Norway."

"We absolutely pay our taxes gladly, but we find it strange that we also have to pay ground rent tax on fish that had already been in the sea for a long time when the ground rent was introduced, without being able to deduct the expenses we have incurred for the fish during the same period," he said.

As the company explains in its release, previously, the tax burden was the same for all the company's activities, both on land and at sea, so it did not matter where the taxes were paid. With the new method, it is only when the salmon is in the sea that it should be subject to extra taxation.

"There was a need to streamline the sea division"

Nova Sea explains that with the introduction of the ground rent tax, "there was also a need to streamline the sea division so that correct tax is paid for the various activities in the company." That change led to the creation of the subsidiary company Nova Sea Havbruk, to which its concessions were transferred before the 'salmon tax' came into effect on January 1, 2023, and where that ground rent tax is now accounted for.

As it explains, the way its business is organized makes the tax not directly visible in Nova Sea's official financial statements, where it may appear that the company's total tax is only NOK 247 million (EUR 21.62 million / USD 23.38 million) but where, it points out, "The correct amount is NOK 847 million."

Moreover, the salmon company's accounting explanations continue, in connection with the introduction of the ground rent tax, "some internal allocations of the ownership of the salmon and salmon licenses were also made, which for accounting reasons are only now becoming visible."

Therefore, Nova Sea claims that the turnover figures do not directly reflect the external customer revenues it has had, but also include significant internal allocations totaling more than NOK 600 million (EUR 21.62 million / USD 23.38 million).

"Very good results in Nova Sea, as in the rest of the industry"

However, despite the fact that taxes in 2023 will quadruple those in 2022, Nova Sea recognizes that, like the rest of the industry, it has performed well, so the company's owners have decided to pay bonuses to all employees. It is, Tom Eirik Aasjord said, "a sign that we value our employees and the work they do."

The bonus is paid based on the achievement of targets for those working in the sea division, in the factory, and in the administration, and the company dedicates up to 7% of its profits to its payout. However, as the bonus pool was also affected by the additional tax burden, this year it was somewhat lower than in previous years - the average payout was NOK 155,000 (EUR 13,563 / USD 14,666) per full-time employee.

Nevertheless, Nova Sea - which was the first company to bring investments back to Norway after 'salmon tax' with the opening of a new smolt plant in Kilvika, and which has since then invested in a new salmon slaughterhouse in Lovund, and in closed fish farming too - remains optimistic. "We have very good results in Nova Sea, as in the rest of the industry," its CEO said.

"This is very useful for all the investments we have decided to make in the coming years. Our investments are almost exclusively concentrated on land investments, which do not provide any reductions in what we have to pay in resource rent tax, so more than ever, equity is important for the industry," Tom Eirik Aasjord concluded.