The basic rule is that all Norwegian companies and foreign enterprises conducting business activities in Norway are subject to Norwegian corporate tax.
General tax rates
- Ordinary tax rate 23%*
- Finance sector tax rate 25%
- Petroleum exploiting tax rate 78%
- Hydroelectric power plants 59%
- Dividend withholding tax up to 25%**
- Branch remittance tax 0%
- Interest withholding tax 0%
- Royalty withholding tax 0%
- Losses carry forward indefinitely
- Losses carry backwards 2 years when closing business in Norway
* Also applicable on Norwegian branch of a foreign enterprise. It has been proposed to reduce the rate to 22% from 2019
** The dividend withholding tax rate is zero on distributions to corporate shareholders genuinely established within the EU/EEA. The rate is also normally reduced according to a tax treaty.
Low thresholds for corporate tax liability
According to domestic tax law the threshold for becoming subject to corporate tax is rather low. The starting point is that any foreign enterprise will become subject to Norwegian corporate tax if it conducts business activities within Norway or if it hires out employees to work in Norway.
However, Norway has tax treaties with about 90 countries, which may provide exemption from Norwegian tax liability. An assessment of tax liability must therefore be made specifically for each foreign enterprise and based on the relevant tax treaty.
The basic rule in the tax treaty is that a foreign enterprise becomes subject to tax if it has a so called “permanent establishment” or “PE” in Norway.
A PE may exist e.g. if the foreign enterprise:
- has a fixed place of business in Norway through which the business of the enterprise is wholly or partly carried on;
- is engaged in a building site or construction or installation project that endures for more than a given number of months, e.g. 6 or 12 months;
- is represented by a dependent person or agent in Norway that is acting on behalf of the enterprise and has, and habitually exercises, an authority to conclude contracts in the name of the enterprise; or
- is engaged in petroleum related business activities on the Norwegian continental shelf for more than in the aggregate of e.g. 30 days.
Norwegian tax authorities are aware that multinationals may be tempted to reduce the taxable profit in Norway when determining the transfer prices between group companies. To adjust transfer prices has become a targeted area for tax auditors. It is therefore essential that intra group prices can be documented as arm’s length.
Certain intra group transaction must be reported when filing the corporate tax return, and in some cases, the enterprise should annually prepare transfer pricing documentation.
Anti-tax avoidance rules
Based on long standing tradition and court cases the tax office may disregard transactions or structures if the dominant motive is to save taxes and the tax effects of entering into the transaction or structure are regarded as disloyal to the tax system.
Also read: Starting a company in Norway – 9 key steps
The Norwegian Country-by-Country Reporting (CbCR) rules imply that Norwegian entities that are part of a multinational group of companies with consolidated turnover exceeding NOK 6.5 billion in the financial year, must notify the tax office when filing the tax return.
Corporate tax return filing
A foreign company that is subject to corporate tax according to domestic Norwegian tax law, is obliged to file the corporate tax return even though the enterprise may be exempted from corporate tax liability pursuant to a tax treaty.
The deadline for filing the corporate tax return is end of May in the year after the end of the income year.
A corporate tax return can only be filed electronically via www.altinn.no. Paper filing is not accepted.
More information: Taxes in Norway - employee taxation
Other compliance obligations
A foreign enterprise doing business in Norway may have several compliance obligations, including registration in various public registers and reporting to various public authorities. The failure to comply will normally result in heavy fines. Please refer to our guide for more information.