As a main rule, all businesses operating in Norway must file a corporate tax return by 31 May. Due to the outbreak of the Coronavirus, the deadline is postponed for three months this year, from 31 May to 31 August.
Obligation to file a corporate tax return
The corporate tax return for 2019 is available online for all businesses from 31 March 2020.
The basic rule is that all Norwegian companies and foreign enterprises conducting business activities in Norway are subject to Norwegian corporate tax and are obliged to file a corporate tax return.
The deadline for filing the corporate tax return was originally 31 May 2020. Due to the outbreak of the Coronavirus, the deadline is postponed for three months this year, from 31 May to 31 August.
Note that the obligation to file a tax return also includes the obligation to provide mandatory attachments to the tax return. A corporate tax return can only be filed electronically via www.altinn.no. This also applies to the attachments. Paper filing is not accepted.
Any foreign enterprise will, as a starting point, become subject to Norwegian corporate tax if it conducts business activities within Norway or if it hires out employees to work in Norway.
A foreign company that is subject to corporate tax according to domestic Norwegian tax law, is obliged to file a corporate tax return. This applies even though the enterprise may be exempted from corporate tax liability pursuant to a tax treaty. The reason for this is that reporting obligations are not covered by the tax treaties.
Foreign companies and other entities with limited tax liability to Norway are obliged to submit the form “Extract of accounts” as an attachment to the tax return. All income and costs related to the activity in Norway must be included in the form. Enterprises obliged to keep accounts are however required to submit the same forms as resident tax payers in addition to the “Extract of accounts” form.
Also read: Remember to file the extracts of accounts
If the corporate tax return is not filed – coercive fines
Previously it had no major consequences if you did not comply with the filing deadline, at least not if you arranged for delivery before the tax office managed to make an assessment. Since the new Tax Administration Act came into force in 2017, the tax office has received some effective tools in its toolbox, including coercive fines.
If the tax return is not delivered by the deadline, the tax office can impose a continuous daily penalty for each day the tax return is not delivered. The same applies when there are obvious errors in the information provided. The maximum coercive fine in these cases is NOK 58,600 (for 2020).
In practice, the tax authorities send out a notice and conditional decision to those who do not file the tax return within the deadline. The notification and conditional decision are in the same letter. The letter provides information on what is the new filing deadline. If you deliver within this new deadline, which is usually relatively short, you will avoid coercive fines.
Application for extended filing deadline
In previous years it has been possible to apply for an extension of the deadline for filing the tax return if the risk is present that the company will not be able to complete the tax return by the ordinary filing deadline.
Since the deadline for filing the tax return this year is postponed for three months from 31 May to 31 August, due to the outbreak of the Coronavirus, it will not be possible to apply for further extension of the deadline.
The tax return should include information on the company’s assets as of January 1 of the tax assessment year, and income and deduction items from the previous calendar year.
For companies who have an ordinary financial year, which is the calendar year, the tax return delivered in 2020 includes income and deductions related to the year 2019.
A financial year other than the calendar year may be used as a taxable period. This applies for branches or subsidiaries of foreign enterprises that use divergent financial year to have the same financial year as the foreign enterprise. It also applies when divergent financial year is used because, due to seasonal activities, the information value of the financial statements increases. In other cases, an exemption must first be granted from the tax office.
When a divergent financial year is used, the income is determined based on the last financial year that ended before January 1 in the tax assessment year. For example, if the company has a financial year that runs from February 1 to January 31, then it is the income in the financial year February 1, 2018 - January 31, 2019 that should be filed in the tax return in 2020.
The obligation to file a tax return applies even though the debt exceeds the value of the assets and/or the costs exceeds taxable income.
Keep in mind changes
Some changes were made in 2019 which are useful to keep in mind when completing the annual accounts and filing the tax returns.
Among other things, the tax rate was reduced from 23% to 22%, while dividends from AS and distributions from general partnerships were sharpened. This means that the dividends and distributions must be adjusted upwards by a factor of 1.44 before calculating the taxable income.
Find out more about Magnus Legal’s tax services on our webpage: Corporate tax in Norway