Mowi takes salmon tax case to court, as Q1 results beset by biological problems

Mowi CEO Ivan Vindheim takes the stand at a court in Bergen, claiming Norway's ground rent tax gives Mowi a "competitive disadvantage". Meanwhile, his company's results reveal EUR 120 million drop in operational EBIT for the first quarter.
"We get a competitive disadvantage compared to the small farmers," Ivan Vindheim told the Norwegian court.

"We get a competitive disadvantage compared to the small farmers," Ivan Vindheim told the Norwegian court.

Photo: North Atlantic Seafood Forum 2024.

In recent days, the debate over Norway's ground rent tax for aquaculture - the so-called "salmon tax" - has had an airing in court, as Mowi CEO Ivan Vindheim testified on the issue.

Vindheim has been a vociferous critic of the new tax legislation since its inception, and announced last August that Mowi would mount a legal battle over the impact of the tax on Mowi's business.

He appeared at a preliminary court hearing in Bergen on Thursday 11 April to set out the Mowi case, which claims Norway's ground rent tax represents a breach of the Norwegian constitution as well as European Economic Area rules.

"The tax affects the entire operation significantly. We get a competitive disadvantage compared to the small farmers when we have to buy concessions and invest," Vindheim said in court, as reported by Norwegian news oulet NRK.

Claims that tax deduction unfairly benefits smaller farmers

Norway's ground rent tax rules include a deduction of NOK 70 million (EUR 5.96m / USD 6.37m), following which any surplus income made by salmon farmers is subject to tax.

Vindheim's argument is that this works to the advantage of smaller farming companies who do not achieve a surplus over the deduction limit. Mowi thus wants the deduction to be removed from the tax rules.

In 2023, Mowi achieved an operational EBIT of EUR 1,028 million (NOK 12.1 billion) and financial EBIT of EUR 981 million (NOK 11.5 billion).

Vindheim said that the tax rate for Mowi had soared from 22% to 47% as a result of the ground rent tax.

However, lawyers for the Norwegian state argued that the NOK 70 million deduction is not illegal and applies to all salmon farmers in the country, as a feature of a progressive taxation approach. According to NRK, the state lawyers also believe Mowi's lawsuit is "premature", since Mowi has not yet received a tax decision from the Norwegian authorities.

The court will now determine whether the case is eligible to go ahead.

Mowi's Q1 2024 performance takes a EUR 120 million hit compared with 2023

The Mowi CEO's court appearance came shortly before the company released its preliminary results for the first quarter of 2024.

In Q1 2024, Mowi reported a total harvest volume of 96.5 thousand tonnes of salmon across its global operations. Of this total, 55,000 tonnes were produced in Norway alone - a fall of 10,000 tonnes in comparison with last year's first quarter.

The company's Operational EBIT for the quarter was approximately EUR 201 million - a significant drop from the EUR 322 million achieved during the same period last year.

The weaker results for this quarter reflect ongoing biological problems for Mowi's Norwegian operations. In its Q1 trading update, the company said that regional biological challenges in Norway, like winter sores and jellyfish, affected the superior quality share and average size of fish, impacting both price and cost performance in the region.

The complete Q1 2024 financial report is scheduled for release on May 8, 2024.

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