International Tax Norway Highlights In Plain English

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Currency – Norwegian Krone (NOK) Dividends received by a Norwegian resident limited company from a limited company Foreign exchange control – No located in a non-EEA country are 97% Accounting principles/financial statements exempt if the Norwegian company has held – Norwegian GAAP and IFRS. Statutory at least 10% of the shares for at least two accounts must be prepared annually. years and the foreign country is not a low- tax country. Principal business entities – These are the public and private limited company Intragroup dividends from Norwegian (ASA/AS), limited partnership (KS), general companies are 100% exempt from taxation, partnership (ANS), branch of a foreign provided the shareholder owns and company (NUF) and sole proprietorship. controls more than 90% of the subsidiary or the ultimate parent (which need Corporate taxation: not be Norwegian) owns and controls directly or indirectly more than 90% Residence – Limited companies of the shares of both companies. The incorporated in Norway and foreign exemption for intragroup dividends also companies with their effective management applies if the distribution is from a limited and control in Norway are treated as company resident in the EEA, provided resident in Norway. the distribution would qualify for the 97% exemption had there not been an intragroup Basis – Norwegian residents are taxable distribution. on worldwide income (unless income is exempt under an applicable tax treaty). Capital gains – Capital gains generally are Nonresidents are taxed only on Norwegian- taxable, subject to an exemption for gains source income. Branches are taxed in on shares (see below under “Participation a manner similar to Norwegian limited exemption”). companies, but only on Norwegian- source income. Exit taxation applies when a company migrates out of Norway’s taxing jurisdiction, Taxable income – Corporate income tax subject to certain exemptions when is imposed on a company’s profits, which migration is to another EEA jurisdiction. If a consist of business/trading income, passive company migrates to a low-tax jurisdiction income and capital gains (subject to an within the EEA, the exemption is conditional exemption for capital gains on shares). on the company conducting real business Normal business expenses may be deducted activities in the new jurisdiction. When in computing taxable income. assets are migrated out of Norway, a built-in gain exceeding certain thresholds is taxable. Taxation of dividends – Dividends received With respect to assets owned by a taxpayer by a Norwegian resident limited company resident in an EEA country, the payment of from another Norwegian limited company or the tax assessed may be deferred in certain a limited company resident in the European cases. However, one-seventh of the original Economic Area (EEA) are 97% exempt from tax must be paid every income year from tax, with the remaining 3% taxed at the the year of the migration. The deferral is standard normal corporate tax rate of 22%. subject to an interest charge and if there For dividends received from a company is genuine risk that the tax may not be resident in a low-tax jurisdiction within the recovered, security must be provided. EEA, the 97% exemption applies only if real business activities are conducted in that Losses – Losses may be carried forward without limit. Liquidation losses only may Dividends – No withholding tax is imposed be carried back two years. on dividends paid by a Norwegian limited company to an EEA resident corporate Rate – The standard corporate tax rate for shareholder, provided the shareholder fiscal years ending in 2019 is 22% (reduced conducts a real business activity and has from 23%). Enterprises engaged in financial an “actual establishment” in the relevant activities generally are subject to corporate jurisdiction. Otherwise, the applicable tax at a rate of 25%. tax treaty rate will apply. Distributions to Surtax – No shareholders resident outside the EEA are subject to a 25% withholding tax, unless the rate is reduced under a tax treaty. Alternative minimum tax – No Interest – Norway does not levy withholding Foreign tax credit – Tax credits for foreign tax on interest payments. tax paid are available in two baskets, “low- tax” or “other.” The maximum credit within Royalties – Norway does not levy each basket is limited to the lower of the withholding tax on royalty payments. foreign tax paid or 22% of the foreign- Technical service fees – Norway does not source income. Credit for underlying tax is levy withholding tax on technical service available if a dividend is (fully) taxable in fees. Norway and the Norwegian limited company has held at least 10% of the shares in the Branch remittance tax –No foreign payer for at least two years. Other taxes on corporations: Participation exemption – Capital gains derived by a Norwegian limited company on Capital duty – No the disposal of shares in another Norwegian Payroll tax – There is no payroll tax. The (or EEA resident) limited company are employer must withhold tax on salary on exempt from taxation. For gains realized behalf of its employees, and remit that to on the disposal of shares in a company in the tax office. a low-tax jurisdiction within the EEA, the exemption applies only if real business Real property tax – Municipal authorities activities are conducted in that jurisdiction. levy “rates” on the occupation of real Capital gains realized by a Norwegian property. A property tax applies to the limited company on shares in a company assessed value of real property, at rates resident in a non-EEA country are exempt ranging between 0.2% and 0.7%, depending from taxation if at least 10% of the shares on the location and type of the property. have been held for at least two years and Some municipalities do not levy the tax. the foreign company is not resident in a low- tax jurisdiction. Social security – The employer’s contribution is differentiated regionally and Holding company regime – There is no ranges between 0% and 14.1%. special regime, but the participation exemption is available for certain dividends Stamp duty – A 2.5% stamp duty is levied and capital gains. on deeds of conveyance.

Incentives – Limited R&D credits are Transfer tax – Transfer tax generally is not available. levied, although there are some exceptions (e.g. registration fees on cars). Withholding tax: Other – Other taxes include petroleum revenue tax and tonnage tax. not having an agreement with Norway for the automatic exchange of information. Enterprises engaged in financial activities In connection with the tax return filing, generally are subject to an additional tax however, Norwegian group companies must calculated as 5% of compensation paid state which company within the group will to employees (the same compensation fulfill the CbC reporting obligation and the as is used for purposes of calculating the country where that entity is resident. employer’s social security contribution). Other – There is no statutory general Anti-avoidance rules: anti-avoidance provision, but a doctrine Transfer pricing – In principle, has developed under which a transaction intercompany transactions are acceptable may be disregarded for tax purposes if for tax purposes if they are based on the the transaction has no, or only minor, arm’s length principle. Documentation consequences other than the reduction of requirements apply. tax, and respecting the transaction would be contrary to the basic policy of the tax Thin capitalization – Interest on related provision in question. party debt generally may be deducted to the extent the interest does not exceed 25% of Compliance for corporations: adjusted EBITDA (earnings before interest, Tax year – The tax year is the same as the tax, depreciation and amortization). For accounting year, which normally is the group companies, external debt generally is calendar year. treated as related party debt when applying the threshold. Consolidated returns – There are no provisions for consolidated returns, but Controlled foreign companies – If at least Norwegian group companies may make 50% of the shares in a foreign company group contributions. resident outside the EEA are held directly or indirectly by Norwegian resident taxpayers Filing requirements – Advance payments of and the foreign company is effectively corporate taxes are due twice a year (on 15 subject to less than two-thirds of the February and 15 April Norwegian tax on the same income, the in the year following the tax year). Any foreign company is treated as a controlled (remaining) shortfall is payable during foreign company (CFC) unless Norway has the fall, normally in November. The tax entered into a tax treaty with the relevant authorities estimate the amount of the country and the income is not of a mainly first two payments based on the previous passive nature. The same conditions apply year’s income. The last payment is based to companies resident in an EEA country, on a tax return, which companies must except that the foreign company will not be file electronically by 31 May. Hardcopy tax considered a CFC if real business activities returns are not permitted. are carried out in the relevant jurisdiction. Penalties – Penalties normally are 20% Disclosure requirements – Norway has but may be up to 60% of the tax that is, or introduced country-by country (CbC) could have been, avoided. Interest also may reporting rules. Documentation must be charged. be provided by 31 December of the year following the financial year-end. For entities Rulings – The tax authorities may issue other than Norwegian- based ultimate an advance ruling at the request of the parents, a reporting obligation generally taxpayer on the tax consequences of a will apply only if entities further up the specific future transaction. ownership chain are resident in countries Personal taxation: income.

Basis – All individuals domiciled or Deductions and allowances – Losses permanently resident in Norway are incurred on the sale of securities are fully subject to Norwegian income tax on their deductible from taxable income. A standard worldwide income. Nonresidents are taxed deduction from ordinary income is available on income received from real and personal for incidental personal expenses of up to property in Norway and on directors’ fees 45% of salary, subject to a minimum and from Norwegian corporations. In addition, maximum employment income of NOK income from personal services carried 31,800 and NOK 100,800, respectively. out through private or public employment The standard personal deduction is NOK in Norway by nonresidents temporarily 56,550. A resident taxpayer is entitled to present in Norway, including persons sent to an unlimited deduction for interest paid on Norway by employment agencies, is taxable. debt. (For individuals investing via certain Norway’s right to tax may be limited under transparent partnerships, the limitations an applicable tax treaty. mentioned under “Thin capitalization” may apply.) Residence – An individual becomes a permanent resident in Norway if he/she is Rates – For fiscal years ending in 2019, a present in Norway for a period exceeding combined municipal and national tax rate 183 days during any 12-month period, or of 22% (reduced from 23%) applies to net 270 days during any 36-month period. income. Income/loss due to ownership in Individuals do not become resident during companies and partnerships, such as gains the first calendar year if the time spent in on realization and distributions, is subject Norway in that year is less than 183 days. to a 1.44 multiplier before taxation; the effective tax rate is 31.68%. Filing status – While spouses generally are taxed as individual taxpayers, if each spouse A progressive bracket tax also applies to derives income, a separate assessment may personal income, with four thresholds. The be claimed. Separate assessment also is marginal rates are 1.9%, 4.2%, 13.2% and used if this results in a lower tax burden. 16.2%, and the corresponding thresholds are NOK 174,500, NOK 245,650, NOK 617,500 and Taxable income – Income tax liability NOK 964,800. The top marginal income tax is based on worldwide income, net of rate is 38.2% (22% + 16.2%). expenses (including interest paid) and foreign income taxes. Taxable income Other taxes on individuals: includes salaries; dividends, interest and royalties; income from real property Capital duty – Generally none and other capital; industrial, commercial and agricultural profits; and shares of Stamp duty – Stamp duty at 2.5% is levied partnership net income, whether or not on deeds of conveyance. withdrawn from the partnership.

Capital gains – Capital gains for fiscal Capital acquisitions tax – Generally none years ending in 2019 are taxed at a rate of 22% (reduced from 23%). Gains from the Real property tax – Municipal authorities sale of real property used as a permanent levy “rates” on the occupation of real residence are taxable if the taxpayer owned property. A property tax applies to the the property for less than one year (five assessed value of real property, at rates years for a vacation home). Gains from the ranging between 0.2% and 0.7%, depending sale of securities are included in taxable on the location and type of the property. Some municipalities do not levy the tax. Value added tax:

Inheritance/estate tax – No Taxable transactions – VAT applies at each stage of production and distribution of most Net wealth/net worth tax – Individuals are goods and services, including royalties, subject to wealth tax on capital exceeding advertising and hotel services. NOK 1.50 million, at a flat rate of 0.85%. Rates – The standard rate is 25%; a Social security – A person resident or lower rate of 15% applies to food and a working in Norway is a compulsory insured 12% rate applies to passenger transport, “member” under the National Insurance hotel accommodation, cinema tickets and Scheme (NI-scheme). The NI-scheme admission to museums, amusement parks is financed by contributions from its and sporting events. Certain transactions members, employers of members and are zero-rated or exempt. the Norwegian state. Parliament sets the contribution rates annually. The employee’s Registration – Businesses with annual contribution is 8.2% of gross income turnover above NOK 50,000 must register derived from employment. The employer’s for VAT purposes. contribution is differentiated regionally and ranges between 0% and 14.1%. Specific rates Filing and payment – There are six filing (a maximum of 11.4 %) apply to income from and payment dates each year (every second self- employment and remuneration for month). work performed by partners in partnerships. Source of tax law: Income Tax Act of 1999 The contribution for other types of personal income (e.g. pensions) is 5.1%. Tax treaties: Norway has concluded 89 treaties. Norway signed the OECD MLI on 7 Compliance for individuals: June 2017.

Tax year – Calendar year Tax authorities: Norwegian Revenue Filing and payment – Tax payable on Authorities employment income is withheld at source by the employer. The deadline for tax return filing for individuals is 30 April following the year end.

Penalties – Penalties normally are 20% but may be up to 60% of the tax that is, or could have been, avoided. Interest also can be charged.

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