When foreign companies embark on projects and launch business operations in Norway, several key factors must be considered. To simplify the onboarding and project initiation process, we've created a list of 25 essential points to remember. This list is not exhaustive or complete but rather a helpful overview for those looking to start a business in Norway.
Determining whether a foreign company's activities in Norway trigger registration and reporting obligations isn't always straightforward. These responsibilities arise when a foreign company begins operations in Norway:
Foreign companies involved in project work without a long-term perspective in the Norwegian market often opt for the NUF structure. We will focus on this option moving forward. If you are interested in learning more about different company registration options, check out our blog covering the difference between an LLC and SP.
Also read: How to establish a Norwegian branch of a foreign company
The official translation of “NUF” is “Norwegian-registered foreign company,” but the term “Norwegian branch of a foreign company” is also used. Experience has shown that the term “branch” can confuse some foreign companies. It is important to understand that the NUF is not a separate legal entity. The NUF is merely a formal registration of the main company or “headquarters” in a foreign country. The formal registration says little about the foreign company's tax and VAT position.
Also read: How to establish a Norwegian branch of a foreign company (NUF)?
After the NUF registration, the foreign company will obtain a Norwegian organization number, which means that the company will obtain access to;
These accesses are critical to be compliant with Norwegian reporting responsibilities.
A foreign company's sales in Norway exceeding NOK 50,000 over a 12-month period must register for VAT in Norway and add VAT to its turnover.
It is possible to apply for advance registration in the VAT register before any turnover accrues. For project-related work, this is often a recommendable solution for foreign companies. Importing goods to Norway triggers an obligation to pay import VAT on the border when clearing the goods through Customs. To avoid upfront payment of import VAT, it often makes sense to have VAT registration before customs clearance.
Also read: 7 FAQs about VAT for foreign businesses operating in Norway
A foreign company taking on a specific assignment in Norway must comply with the so-called Assignment and Employee Register (often called the “RF-1199 / RF-1198 reporting scheme”). In short, the client must file basic details about the assignment, such as relevant dates, whether the foreign contractor merely hires out employees or is a “genuine subcontractor”, and whether construction, installation or assembly works occur. These details are critical to find the correct tax and VAT positions of the foreign company. Furthermore, the foreign company is responsible for filing basic details about all employees working on the project.
The distinction between a “genuine subcontract” and a “hired labor contract” is unclear.
A typical hire-out-of-labor contract will imply that the foreign company does not have any risk and responsibility for the work performed by the employees. In short, the client is paying for the labor itself and not a certain result.
A genuine subcontract should imply that the foreign company is obliged to deliver a certain product and would not get paid if the job were not performed properly. In other words, the subcontractor has an economic risk and the responsibility for the result of the work performed by the employees. In short, the client is paying for a certain
result. As mentioned, the distinction is critical to finding the correct tax positions (for foreign companies and their employees) and VAT positions.
Also read: Why contract classification is key to staying compliant in Norway
Planning ahead is critical when winning a project in Norway, especially when a foreign company will bring non-EU / EEA workers to Norway. The starting point is that any non-EU / EEA worker will need a work permit from UDI (the Norwegian Directorate of Immigration) to perform work here in Norway. The application process is comprehensive, and the processing time can be severe, at the time of writing, 3-4 months.
The so-called technical expert rule is a practical and important exception from the work permit application system. In short, a non-EU /EEA worker with a certain technical expertise can, without a work permit, enter Norway to work on a certain project where the need for the technical expertise does not exceed a duration of 3 months.
Also read: Work permits in Norway for skilled workers
When a foreign employee enters Norway, a physical visit to a Norwegian tax office is required. An appointment must be ordered in advance here.
The purpose of the ID check is for the workers to identify themselves to the Norwegian tax authorities and obtain a Norwegian tax deduction card.
The employees should bring identification papers (for instance, a passport), a confirmation letter describing the Norwegian assignment or the employment contract, and a filled-out tax deduction card application form containing certain personal data. The foreign company can also file this tax deduction card application form electronically in advance.
Also read: ID control for foreign employees in Norway
Foreign workers often carry out tasks at Norwegian buildings or construction sites, where HSE cards are essential. These cards are typically required for physical access to the site and function as admission passes. To avoid delays and complications, it's crucial to follow the steps outlined above and initiate the process well before the cards are needed.
Also read: What is an HSE card?
According to the Norwegian National Insurance Act, a foreign company doing business in Norway and its employees must contribute to the Norwegian National Insurance Scheme. However, thanks to international agreements, it is relatively easy to avoid these payment obligations. Workers from EU countries should obtain an A1 Form documenting their membership in the National Insurance Scheme of their home country.
As mentioned, one of the purposes of the ID check is to obtain a Norwegian tax deduction card. According to the Norwegian Tax Payment Act, foreign companies must deduct and pay advance taxes to their employees working in Norway. Without the tax deduction card, the “default” is that the employer must deduct 50 percent advance tax. For companies without a permanent establishment in Norway, which we will touch on further below, it is possible to apply for an exemption from advance tax deductions.
Also read: 5 tax deductions to claim in your Norwegian tax return
One of the most important reporting responsibilities in Norway is the so-called A-report scheme (called “A-melding” in Norway) – a salary reporting system. Once a month, the foreign employer must report salary information about each employee through the A-report scheme. Salary information includes all kinds of remuneration related to the work in Norway. This is a rather complicated set of rules. For instance, how the workers are living, whether their premises have cooking facilities, etc., are relevant questions.
Also read: What is an A-report: Essential guide for employers in Norway
The corporate tax rate in Norway is currently 22 percent. According to the Norwegian Tax Act, Section 2-3 (1) letter b, a foreign company is taxable to Norway on profits from “business activities… which take place in” Norway. Presumably, the business profits from the Norwegian activity will also be taxable in the foreign company’s country of residence. To avoid double taxation, Norway has entered tax treaties with roughly 90 countries.
To determine which country has “the upper hand” in imposing a tax on the business profits, each tax treaty must be studied closely. As a main rule, Norway will only be able to impose a tax on business profits attributable to a permanent establishment in Norway.
Also read: What you need to know about the Norwegian tax system
Also read: Business in Norway - Tax audit
According to the Norwegian Tax Act, foreign employees' income from Norwegian activities is taxable in Norway. Presumably, the income from Norwegian activities will also be taxable in the foreign worker’s country of residence. To avoid double taxation, we must again refer to the tax treaties to determine who has “the upper hand.”
Whether the employees will be taxable to Norway, cf. the Tax Treaty is more complicated, but we can start with the obvious. If the employees are hire-out employees, the Norwegian tax authorities will probably claim that the workers are taxable to Norway.
If the company’s Norwegian activity constitutes a permanent establishment, the main rule is that employees will be taxable to Norway for the income related to the permanent establishment.
Suppose the foreign company's construction work does not constitute a permanent establishment in Norway. In that case, the workers will—in most tax treaties—avoid Norwegian taxability unless they have stayed in Norway for more than 183 days within a 12-month period. However, each specific tax treaty must be studied closely, as there are many pitfalls.
From 2019, a new and simplified tax scheme, PAYE (Pay as You Earn), is available for foreign workers in Norway. Most foreign workers will fall under this scheme the first year they work in Norway.
In short, income from employment is taxed at a flat rate of 25 percent. This rate includes employees’ social security contributions, which are 7.8 percent. Filing a valid A1 form with the Norwegian authorities, exempting the employees from the Norwegian social security scheme, reduces the flat tax rate to 17.2 percent (25 minus 7.8).
The PAYE scheme is meant for foreign employees who work in Norway for short periods of time and who are not tax residents (less than 183 days in Norway within a 12-month period). The scheme also applies to most foreign workers in the year in which they become tax residents.
It is impossible to join the PAYE scheme if the annual income exceeds NOK 670 000 for the income year 2024).
The starting point is that all foreign companies with business activities in Norway must file a Norwegian corporate tax return. The deadline for submitting the company tax return is 31 May of the following year (e.g. The deadline for the 2024 company tax return is 31 May 2025).
For foreign companies with a permanent establishment in Norway, cf. above, the starting point is that Norway has taxation rights (tax rate 22 percent per 2024) to business profits “attributable” to the permanent establishment. A natural starting point is to “simulate” that the Norwegian permanent establishment is a separate legal entity. However, the allocation of income/costs is never black or white, and there are many complex questions to consider.
Please note that from 1 January 2022, it is possible to apply for an exemption from the tax return filing obligation. The exemption will only be given to foreign companies that can substantiate that their Norwegian activities will not constitute a permanent establishment in Norway.
Regardless of the foreign employee's taxability, a Norwegian tax return must be filed for all workers who are not part of the PAYE scheme. The deadline for the 2024 tax return is 30 April 2025. The employee will receive a pre-filled tax return showing the salary income reported through the A-report scheme.
In practice, foreign employees can define Norwegian taxability. If the relevant tax treaty suggests that Norway does not have the taxation right, for instance, when the employer does not have a permanent establishment in Norway, and the worker’s Norwegian presence has not exceeded 183 days within a 12-month period (or 270 days within a 36-month period), the employee can “cross out” the Norwegian income and attach a brief explanation.
After the corporate and employee tax returns have been filed, the Norwegian tax authorities will review them, which leads to a tax assessment. If the tax authorities conclude that there is no Norwegian taxability, there is no need for further action.
However, suppose the foreign company or the foreign employee is taxable in Norway. In that case, the Norwegian tax assessment will document the Norwegian tax burden, which can be used to, for instance, obtain a tax credit in the company’s / employee’s country of residence.
In general, all foreign companies doing business in Norway must keep books of accounts based on the Norwegian general accepted accounting principles (“NGAAP”). The Register of Company Accounts will demand annual accounts for all foreign companies that are registered in the Register of Business.
Enterprises (“Foretaksregisteret”). Foreign companies that are only registered in the Central Coordinating Register for Legal Entities (“Enhetsregisteret”) will, as a starting point, not be asked for annual accounts.
Suppose the relevant tax treaty gives Norway the taxation right to the business profits of the foreign company, primarily when the company has a permanent establishment in Norway. In that case, the company must have a Norwegian auditor if the Norwegian turnover exceeds NOK 7 000 000, if the balance sheet shows assets of more than NOK 27 000 000, or average number of employees exceeds 10 full-time equivalents.
As advisors, one of our goals is to ensure that our clients avoid any difficulties with the Norwegian authorities. Employment rights are important in Norway, and the Labour Inspection Authorities will often carry out controls, for instance, at construction sites. Also, larger Norwegian contractors can at any time carry out controls to ensure that their foreign subcontractors comply with the Norwegian Working Environment Act.
It is fair to say that the Norwegian Working Environment Act gives employees stronger rights than laws in many comparable countries. As an example, workers have strong protection against unjust termination.
In our experience, working hours and salary levels are often the focus of the controlling party.
Also read: What are the legal responsibilities of an employer in Norway?
Norwegian companies strongly focus on HSE when engaging a foreign company. In most significant contracts, the foreign company will be asked to present an HSE plan and/or a so-called “Safe Job Analysis.”
From an HSE perspective, it is rather clear that the Board of Directors and the General Manager in the main company can potentially be held responsible for accidents, failures, and incidents at construction sites in Norway. In short, “the employer” is responsible for HSE measures, cf. Section 3-1 in the Working Environment Act. The term “employer” refers to “the person who manages the business in the employer’s place”. In most cases, this will be the company’s chief administrative officer, which is the “general manager” from a Norwegian point of view.
In practice, this means that the General Manager of the main company should ensure that HSE measures / HSE plans / HSE routines are bullet-proof for workers traveling to Norway to perform work.
Also read: When is a safety representative required in a company?
The Norwegian activity of a foreign company often includes installing equipment, sometimes with certain electrical components.
Companies that perform work related to electrical installations and repair of electrical equipment are obligated to register at the so-called “Elvirksomhetsregisteret,” the Norwegian register of enterprises that design, install, and maintain electrical installations and electrical equipment. The registration itself is rather simple. However, the main issue is that the subject to registration must list a professionally responsible person (or “Faglig ansvarlig” in Norwegian). The application process is rather exhausting and rather time-consuming. Planning ahead is critical to avoid delays.
Also read: Work permits in Norway for skilled workers
Over the last couple of years, we have experienced that Norwegian companies, especially big public companies, have started demanding that foreign companies obtain certain quality certifications before winning contracts in Norway. The so-called “Central Approval” / “Sentral Godkjenning” or StartBANK certification are examples. It is fair to say that these quality certifications can have a commercial effect and increase visibility in the Norwegian market, adding a certain stamp of quality to the business.
Also read: StartBANK registration and its benefits
The Norwegian Transparency Act entered into force on 1 July 2022. The Act promotes enterprises’ respect for fundamental human rights and decent working conditions. It will primarily be relevant for larger enterprises.
Also read: What is the Norwegian Transparency Act: Why, who and what
Section 3 of the Transparency Act points out that the company “on the date of financial statements [must] exceed the threshold for two of the following three conditions:
Obviously, many foreign companies, especially those with a long-term perspective on the Norwegian market, will choose to incorporate a subsidiary to operate in Norway. The Limited Liability Company in Norway is called “aksjeselskap” or “AS.” The AS will be subject to the corporate tax rate of 22 percent and, of course, the Norwegian Companies Act.
Also read: Establishing a private limited liability company in Norway
The list above offers a glimpse of the key considerations when entering the Norwegian business market. Navigating Norwegian compliance can be challenging due to its laws, regulations, reporting requirements, and complex application processes.
At Magnus Legal, we specialize in Norwegian business law and compliance. For years, we've assisted international companies in successfully conducting business in Norway. Our legal team, made up of business lawyers, legal advisors, and accountants, brings extensive expertise in: