Costs and Benefits of Tax Evasion

Tax evasion carries a maximum penalty of two years in prison. That's according to the law in Norway. In addition, there's confiscation of properties. Those caught will see their properties taken away and sold to cover lost taxes and damages.

From this, it follows that tax evasion needs to be sufficiently discrete to go undetected, or so grand and well executed that it is worth the cost.

In cases where up to two years in prison and confiscation of remaining properties is preferable to paying the tax calculated by the taxman, tax evasion is the rational option.

Case in point was the capital gains tax I was asked to pay on the house I sold in Norway in January 2017. The calculated tax was simply too high, so I took measures to avoid confiscation of remaining properties, and mentally prepared myself for what would undoubtedly be an unpleasant encounter with the taxman. Since taxes on gains in 2017 were only due in 2018, I had a full year to take care of all the arrangements required for a well executed tax evasion.

As it turns out, the taxman has been relatively quiet. There has been a few letters, but no-one has come to get me, and nothing has been confiscated.

The reason nothing has been confiscated is that there are no properties registered in my name. My adult children in Norway own everything that was left unsold. My wife here in Portugal owns everything I brought with me. There is also a stack of gold hidden away in a safe location. None of this can be confiscated.

The down side of this arrangement is that I have to spend the rest of my life making investments through the proxies that are my children and wife. There is also a continuous threat of imprisonment. However, I would much rather spend some time in a Norwegian prison than the rest of my life knowing I was too scared to stand up for myself and my family.

While investing through proxies is a little inconvenient, this arrangement has the advantage that there is no inheritance to be concerned with. The division of my estate has already taken place. This eliminates the risk of family members feuding over my estate after my death.

Giving control of my estate to the younger generation at an early age has the further advantage that it gives my children ample time to get used to it. They can also seek advice from me. This adds to their maturity and social status, which further promotes their chances of success in life.

A further benefit lies in the confidence and sense of autonomy that I have experienced ever since I refused to submit to the taxman. My wife and I have never had it so good. We live sovereign lives as king and queen of our realm, and it feels absolutely fantastic.

By Heralder - [1], CC BY-SA 3.0, Link