Foreign multinational companies doing business in Norway must be aware of the multitude of obligations they must comply with, and the basic of Norwegian compliance obligations are rather burdensome. Failure to comply commonly may results in severe sanctions. As always, it is better to do the right things from the beginning than to tidy up afterwards. In this article we'll give you a brief overview of the required actions applicable in 2023 for foreign companies doing business in Norway. This encompasses, among other factors, information on registration, reporting and tax liabilities in Norway. You'll can also download our guide on the subject.
What type of legal entity is your operation structured as?
Each enterprise must consider which form of entity that best suits its particular purpose, taking into account commercial considerations, tax and VAT issues, compliance and administrative costs, limitation of liability, etc.
The most common alternatives are:
- Branch, called “NUF” in Norway (may create permanent establishment for tax purposes)
- Limited Liability Company (AS or ASA)
- Partnership and joint venture (ANS, DA, KS)
- Sole proprietorship
Also read: How to choose the right corporate structure in Norway
Guide: How to do business in Norway
Planning on doing business in Norway? Then download our brief guide and get an overview of everything you need to know when doing business in Norway.
Registrer your business with the registry at Brønnøysund
Everyone that conducts business activities within Norway must register with the centralised Registry at Brønnøysund. The Registry provides the enterprise with a Norwegian ID number, called “organisation number” or “org.no.”. Such org.no. is required when entering into contracts, invoicing, reporting, communicating with public authorities, etc.
Note that the filing of various forms and communication with Norwegian government agencies is normally done via the internet portal www.altinn.no. In order for the enterprise to have access to Altinn, an individual with a registered role of the enterprise must have a Norwegian ID-number and Altinn access codes. To facilitate easy access to Altinn, the lawyers of Magnus Legal may assist by being registered as a contact person or business manager in the initial phase.
Read more: Register a company in Norway
What about corporate tax registration?
There is no specific corporate tax registration when doing business in Norway, but the tax office has access to the Registry at Brønnøysund. Thus, the tax office expects that all entities comply with all the various reporting obligations and file an annual corporate tax return.
Important to note is that any principal engaging a foreign sub-contractor to conduct work in Norway is obliged to report the contract to the tax office on a form called “RF-1199”. And the foreign sub-contractor must report all employees working in Norway at the form “RF-1198”.
The employees must obtain a Norwegian personal ID number (called “D-number”) and a tax deduction card. In order to obtain these, the individual must physically meet at a particular tax office for an ID-control within 14 days after commencing work in Norway.
The employee must bring:
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a valid passport or national ID card
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an application for tax deduction card (form RF-1209)
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the employment contract or written confirmation of work assignments in Norway.
What about VAT when doing business in Norway?
The Norwegian default VAT rate is 25%, although reduced to 15% on food and 12% on, e.g., public transportation, hotel accommodation.
Enterprises selling goods or services exceeding NOK 50,000 over a twelve-month period are obliged to register for VAT in Norway and add VAT on the invoices. On the other hand, a VAT-registered entity is entitled to a refund of the input VAT on its own purchases of goods and services used in the business. The VAT is reported on VAT returns, which normally are filed every other month.
Also read: Should your business register for VAT in Norway?
A foreign enterprise that is VAT liable without any fixed place of business in Norway must register via a Norwegian based VAT representative. The VAT representative is obliged to control that the VAT handling is correct and is responsible for filing the VAT return. Enterprises from certain EU/EEA countries are exempted from the obligation to appoint a VAT representative.
What do you need to consider in regards to import of goods and services to Norway?
When importing goods and services, import-VAT and customs duties might incur, and the actual customs transaction is based on the principle of declaration. Bear in mind that Norway is not a member of the EU and thus regarded as a third country in relation to the transaction of goods and services cross-border from the EU. It is possible to obtain custom credit upon application.
Also read: Import to Norway – VAT and customs
Corporate taxation
In principle, all foreign enterprises doing business in Norway are subject to Norwegian corporate tax at a rate of 22%.
Additional corporate tax is levied on certain industries such as on oil and gas exploitation companies, hydroelectric power plants, wind farm electricity plants and fish farming industries.
Also read: Corporate tax in Norway - the basics for non-Norwegian enterprises
However, Norway has tax treaties with about 90 countries, which may provide exemption from Norwegian corporate tax liability. Thus, an assessment of tax liability must be made specifically for each foreign enterprise.
Note that, unless a specific exemption has been granted, the foreign enterprise is obliged to file a corporate tax return even though it may be tax exempted according to a tax treaty. In such case the exemption from corporate tax liability under the tax treaty should be explained in an enclosure to the tax return.
What about work and resident permits for your employees?
An employee from a country outside the EU/EEA who is seconded to work in Norway must have a residence permit that also covers the right to work. There are various categories for such application and employees of multinationals will commonly be regarded as “skilled workers.” The application must have been accepted prior to the commencement of the work in Norway.
These restrictions are in general not applicable for EEA citizens. However also these employees must register with the police.
Also read: Work permit in Norway
Employee tax and social security contribution
The employer must monthly report salary, fringe benefits, tax withholding and the number of days in Norway for each employee. These reports (called “A-melding”) are submitted electronically.
Also ready: All you need to know about the Norwegian tax report system – A-melding
Salary is taxed at rates up to 39.5%, and the basic rule is that individuals working in Norway become subject to Norwegian tax from day one. However, a tax exemption may be granted according to the tax treaty between Norway and the home country of the individual. Such treaty-based tax exemption does not relieve the individual from the obligation to file individual tax return.
- The employee will also have to pay contribution of 7.9% to the Norwegian social security system unless relief is granted according to a relevant social security agreement.
- A simplified PAYE (Pay As You Earn) scheme may be applicable for certain employees that are not regarded as tax resident in Norway and with Norwegian income not exceeding NOK 642 950 (2023).
- The PAYE-tax rate is flat 25% (when including the 7.9% employee social security contributions) and 17.1% if the employee is exempted from social security contribution.
Note that the value of certain fringe benefits, such as free accommodation and home trips, that may be tax exempted under the ordinary rules are to be included as taxable under the PAYE-system.
If PAYE applies, the employee shall not file an individual tax return.
Also read: Don’t forget the annual wage report.
Also, note that employers with employees working in Norway may suffer Norwegian payroll tax of up to 14.1% (employer social security contribution) unless an exemption is granted. In 2023 there is an additional 5% rate on annual salary exceeding NOK 750 000.
And last, note that financial institutions are hit by another 5% general social security contribution.
The employers will further commonly be obliged to offer the employees membership in an occupational pension plan.
Also read: Individual income tax return to Norway
Employee’s rights are highly protected in Norway
Employees working in Norway are covered by the Norwegian working environment regulations, including provisions on minimum salary in certain industries.
Find out more: Employee rights in Norway
The employees are protected against unjust termination, and the employer must comply with certain formal procedures including notice period in case the employment contract is to be terminated.
Ensure impeccable accounting and auditing practices
In general, all entities doing business in Norway must keep books of accounts based on the Norwegian general accepted accounting principles (“NGAAP”). The annual financial accounts must be filed with the Norwegian Registry of Accounts.
Further, note that an independent auditor shall audit the accounts when certain thresholds are met.
Also read: Remember to file your extract of accounts to the Norwegian tax administration
Avoid sanctions and penalty charges when doing business in Norway
From a pure business perspective, the experience is that any committed business partner or principal will require that foreign contractors or business partners comply with Norwegian laws and regulations. Further, for non-compliance, the authorities will levy sanctions including heavy penalty taxes and interest charges, late filing penalty charges, deemed discretionary assessments, etc.
Also read: Business in Norway - Avoid sanctions and penalty charges
Guide: How to do business in Norway
Planning on doing business in Norway? Then download our brief guide and get an overview of everything you need to know when doing business in Norway.
The information provided in this article is valid as of January 1, 2022. Tax legislation undergoes rapid changes, and we recommend that you should contact your lawyer with Magnus Legal to obtain tailored advice for your needs.
Article first published February 2018, updated January 2023.
