Doing Business in Norway

Norway is part of Northern Europe and constitutes the western part of the Scandinavian peninsula. The country is long and narrow, and shares its eastern border with Sweden, Finland and Russia. To the north, west and south, Norway’s coastline stretches along the Barents Sea, the Norwegian Sea, the North Sea and Skagerrak.

Its coastline, with numerous and scenic fjords, is more than 20,000 km long. The coastline is dotted with large and small islands, of which more than 200,000 have been registered. The Norwegian landscape is rugged and mountainous, though it is also characterised by high plateaus and wide valleys.

Norway is known as the “Land of the Midnight Sun” since part of the country is situated north of the Arctic Circle. During the summer months in this region the sun never descends beneath the horizon, while during the winter months the sun never rises above it.

The Norwegian climate is mild, particularly along the coastline, where the Gulf Stream and the Arctic front create warm air currents. The Gulf Stream also keeps most Norwegian harbours ice-free in winter months. However, the inland climate is cold during the winter, and the northernmost region has a more Arctic climate. Norway is situated in one of the wettest regions in the world, outside the tropics. The number of days of precipitation varies between the different regions but is usually somewhere between 100 and 200 days per year. 

Norway is relatively sparsely populated, with five million inhabitants spread over approximately 350,000 square kilometres. Most of the population lives in the southern parts of the country, while the northern parts are more sparsely populated. The population of Oslo, Norway’s capital, is just above 700,000.

The official spoken language in Norway is Norwegian, a North Germanic language in the Indo-European language family. It is closely related to Swedish and Danish, and most Norwegians, Swedes and Danes can understand each other. Norway has two official written languages: bokmål and nynorsk. Bokmål derives from written Danish while nynorsk is a more modern written language based on Norwegian dialects.

English is compulsory in Norwegian primary and secondary school education.

Norway is a constitutional monarchy with a parliamentary democratic system. Elections are held every four years. The Norwegian Constitution (Grunnloven) of 1814 builds upon the principles of popular sovereignty, the division of power and certain fundamental human rights and freedoms.

The Constitution states that the King is the head of state, but the gradual introduction of the parliamentary system from 1884 has meant that the role today is more ceremonial in nature. The executive power lies with the government, which is headed by the prime minister. The government is formally appointed by the King on the recommendation of the Norwegian parliament (Stortinget).

Legislative power lies with the parliament, while judicial power lies with the independent courts of law. The ordinary courts of law consist of the conciliation boards, the district courts, the courts of appeal and the Supreme Court. The conciliation boards handle civil cases only. The judges in the three higher courts are appointed by the government and are civil servants who may only be dismissed by court judgment. 

Norway is rich in natural resources such as oil, natural gas, hydropower, and fish. In recent decades oil has contributed to making Norway one of the richest countries in the world, and its inhabitants have experienced a significant increase in their standard of living. For several consecutive years the UN has ranked Norway’s living standard as the highest in the world, based on life expectancy, level of education, and gross domestic product per capita. A large portion of the country’s oil revenues are placed in funds that are used to regulate the economy and to secure economic prosperity for future generations. Due to the latest development in oil prices, it is expected that the Norwegian economy will have to adapt to lower demand from the oil sector and that we will be more dependent on growth in other sectors to support growth in the economy.

The Norwegian economy is based on a capitalist, welfare society. Most sectors are operated by private companies, though markets in areas such as competition and environmental policy are highly regulated. The state controls certain sectors, such as health, education, and hydroelectric power production. The state also owns significant shareholdings in large, listed companies, including Equinor.

Norway is not a member of the European Union (EU). However, Norway is a member of the European Economic Area (EEA) and has signed a trade agreement with the EU. The trade agreement allows Norway to participate in the European market on similar terms as those that apply for the EU member states. As an EEA member Norway implements most EU common market legislation.

Normal business hours are between 08.00 and 16.00 from Monday to Friday. Most government agencies are closed on Saturdays and Sundays. Please refer to the section on Employment for more information on working hours.

Public holidays in Norway are prescribed in the Public Holidays Act. This act treats all Sundays as public holidays. The same applies to the following days:

Limited liability company. The most common type of business entity in Norway. A limited liability company can be a private entity, known as a private limited liability company (aksjeselskap (AS)) or a more general type, known as a public limited liability company (allmennaksjeselskap (ASA)). Both forms are regulated by specific legislation: The Limited Liability Companies Act and the Public Limited Liability Companies Act respectively. These acts are based on the same principles as the EU’s limited company legislation. The main difference between the two types of business entities is that private limited companies may not be listed on the stock exchange. The minimum capital requirement is NOK 30,000 for private limited liability companies and NOK 1,000,000 for public limited liability companies. Requirements governing the number of board directors and board composition vary according to company type, turnover, number of employees and whether a company has a corporate assembly.

Limited partnership (kommandittselskap). Has one or more partners with unlimited liability and one or more partners with limited liability. Limited partnerships are regulated by the Partnerships Act.

Unlimited partnership (ansvarlig selskap). The partners have joint and unlimited liability for an entity’s liabilities. An agreement may be made to apportion liability pro rata. As in the case of limited partnerships, unlimited partnerships are regulated by the Partnerships Act.

Silent partnership (indre selskap). May be established as a limited or unlimited partnership. What distinguishes a silent partnership from other types of business entity is that it may not act as a separate entity towards third parties.

Sole proprietorship (enkeltpersonforetak). A common type of business entity in Norway. This type of business entity requires that one, physical person is personally responsible for a business activity and has unlimited liability for the business enterprise.

Norwegian branch of a foreign company (NUF). A foreign company may conduct business activities in Norway via a branch. The branch is not regarded as a legal entity.  As a result, the foreign company that carry out activities in Norway is liable for claims incurred by the actions carried out by the branch. Business who has VAT liable revenue from sales in Norway will be registered as a NUF even without a place of business in Norway.

Anyone who conducts business activities in Norway must be registered and assigned an organisation number, regardless of type of business entity. Registration is done by submitting the necessary documentation to the Norwegian Business Register. The registration form and information on other documentation required, are available on the Norwegian Business Register website.

Registration in the Central Coordinating Register for Legal Entities is the minimum requirement. If you have reporting or registration obligations in Norway, you are obligated to register in the register.

If you are conducting business activities in Norway for more than NOK 50 000, you are obligated to register in the Registry of Business Enterprises.  

In addition to registering the business entity itself, a representative for the entity must be registered. This person must hold a Norwegian personal identity number or a D-number (an ID number for foreign persons). Applications for a D-number must be accompanied by a verified copy of approved proof of identity. Outside the Nordic region this must be done by someone who is authorised to perform notarial acts. The registered representative does not need to have an ownership interest in or employment relationship with the entity; for example, he/she can be a Norwegian accountant or lawyer.

All contracts given to a foreign contractor onshore or offshore must be reported in the Assignment and employee register. It is the principal’s duty to report contract given to a foreign company or person when the value of the assignment exceeds NOK 20,000. The foreign contractor is obligated to report the employees that work on the assignment in Norway or on the continental shelf.

Based on the reporting, the tax administration will issue d-numbers and tax deduction to the foreign employees.

Based on the reporting, the tax administration will also assess whether the foreign contractor and/ or the foreign employees are taxable to Norway.  

Persons who intend to stay in Norway for more than six months, must apply for a national ID number by reporting a move to Norway at the tax office. Foreigners who come to work in Norway for less than six months will not be given a national ID number. Instead, they will be allocated a D-number. Exceptions apply for continental shelf workers and seafarers. They will be assigned a D-number even if they work for more than six months.

The Norwegian tax authorities may order a D-number if a person is liable to pay tax in Norway. A D-number can also be order by the Norwegian Business Register, the Norwegian Social Security Authorities (NAV) and banks. 

The Norwegian tax authorities perform identity control of foreign employees in Norway. An ID control is a check of a person’s identity and identity documents, and the person must attend in person at a tax office to verify their identity. The ID control applies for all persons working onshore in Norway. There are a few exemptions. ID control is not required for foreign person who is working offshore. If the person is in a situation where it will be very burdensome to meet at the tax office in person, an application for an exemption can be submitted. 

Companies’ resident in Norway are taxed on the basis of worldwide income. Partnerships are taxed at the owner/partner level. Companies’ resident abroad is only taxed on income derived from sources in Norway.

Under Norwegian law, a foreign company is deemed to be resident in Norway if the effective management of the company can be said to be performed in Norway. The place of effective management is not only decided by place of management at board level, but also where the management at CEO level is performed, and in some cases the location of the offices and where the company performs its operations.

As a starting point, a company incorporated in accordance with Norwegian company law will always be considered as tax resident in Norway. However, if the company is considered tax resident in another country under a tax treaty, the company will not be deemed resident in Norway.

Companies that are tax resident in Norway or has limited tax liability in Norway are subject to a corporate tax rate of 22 % on their net tax income.

Special tax regimes apply to income from the exploration of petroleum resources, shipping income and income from the production of hydropower. 

In line with the principle of worldwide income, all income is essentially deemed to be taxable income, including business income, interest, dividends, capital income, profits on realisation of assets, and income derived from sources abroad. An important exception applies under the participation exemption method, whereby companies owning shares or partnership-units are exempted from paying tax on profits or dividends from shares or partnership-units, subject to certain conditions.

Deductions are allowed for expenses incurred in connection with generating, maintaining, or securing taxable business income. This applies to costs of goods sold, payroll expenses, and interest expenses (although interest limitation rules apply on certain terms). As a rule, operating assets are capitalised and depreciated according to set rates. Representation expenses are normally not tax-deductible. The same applies to expenses that are not related to the company’s business activities.    

Deductions are also allowed for losses relating to a company’s business activities, including account receivables. Losses on realisation of assets are tax deductible regardless of whether the assets are owned personally or by a company. No deductions are allowed for losses on shares or partnership-units covered by the exemption method. No deductions are allowed for bad debts related to the financing of subsidiaries when profits and dividends from these are covered by the exemption method. Tax losses may be carried forward to subsequent years indefinitely.

Norway has rules for limitation of interest deductions. Instituted in response to the OECD's recommendations concerning BEPS, this rule aims to prevent multinational enterprises from artificially reducing taxable profits in Norway by excessively leveraging their Norwegian entities, particularly through intra-group loans.

Under the current regulation, the deductibility of net interest expenses—interest expenses minus interest income—is limited. If a company's net interest expenses surpass a certain threshold, only a portion of these expenses is deductible against taxable income. Specifically, net interest expenses are deductible up to 25% of a company's tax EBITDA (earnings before interest, taxes, depreciation, and amortization).

However, there are exemptions to the application of this rule. This is to ensure that companies with limited interest expenses or those involved in genuine commercial activities aren't unduly burdened. For example, there is a minimum threshold below which the rule does not apply. Additionally, certain provisions allow for exceptions based on the equity ratio of the Norwegian entity in comparison to the group's overall equity ratio. If a Norwegian entity's debt-equity ratio is not significantly higher than that of the entire group, it may be exempted from the rule.

Tax forms for limitation of interest deduction and exemption for limitation of interest deduction are submitted as attachments to the company tax return. 

Companies’ resident in Norway are liable for tax on income derived from sources abroad.  To avoid double taxation, provisions for double tax avoidance are prescribed in Norwegian law and tax treaties Norway have entered in to. Under Norwegian domestic law, double taxation is avoided through the credit method, which is also the most used method in the tax treaties. Subject to certain conditions, tax paid in a source country may be deductible from Norwegian tax. The deadlines for claiming credit in Norwegian tax are more extensive than the normal provisions for submitting and changing the tax assessment. Companies claiming credit in Norwegian tax, is required to document that they meet the conditions to have the right to deduct the foreign tax in the Norwegian tax.

Norway has also signed a Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The purpose of the MLI is to modify existing tax treaties by implementing BEPS measures from the OECD’s Base Erosion and Profit Shifting project.  

Under Norwegian domestic law, companies that are not resident in Norway but derive income from Norwegian sources are liable to pay tax to Norway on such income. This mainly applies to income from real or movable property which a company owns or controls in Norway, and income from business activities conducted by a company in Norway. There is no de minimis threshold for business activities in Norway, which leads to tax filing obligations for foreign entities as soon as an activity is performed in Norway.

Dividends from companies’ resident in Norway are liable to tax in Norway unless the recipient is covered by the exemption method. Tax on dividends must be deducted by the company paying the dividend (withholding tax).

Norwegian domestic law is limited by tax treaties which Norway has signed with other countries. These tax treaties are to a large extent based on OECD’s Model Tax Convention. 

With respect to taxation of profits from sources in Norway, it follows from most tax treaties that the enterprise must be a business activity that is conducted through a permanent establishment in Norway in order to be liable to tax. A more detailed definition of what constitutes a permanent establishment is given in OECD’s Model Tax Convention and in the Commentary on Article 5 of the model tax convention.

These conditions require the existence of a fixed place of business, a certain duration in time connection to such a place, and that the business activities are conducted through the fixed place of business. Examples given in the Model Tax Convention are A place of management, a branch, an office, a factory, or a workshop. 
For building and construction activities the conditions for a permanent establishment are fulfilled if an activity lasts more than twelve months or six months in more recent agreements. Norway has signed the Multilateral Instrument (MLI), without reservations for Article 12. Accordingly, the new definition of agent PE is implemented in a number of existing tax treaties. The new definition, based on BEPS actions, focuses more on activities leading to contracts rather than whether the intermediary actually concludes contracts or not. The conditions for agent PE may be fulfilled if the agent regularly enter contracts to be fulfilled by the main enterprise or play a key role in contract negotiations as routinely leading to the conclusion of contracts for the main enterprise. 
Preparatory and auxiliary activities are not deemed as permanent establishments. Examples of these are facilities used solely for the purpose of storage or display of goods. However, in the new definition, based on BEPS actions, an Internet based company’s facility, used as storage or display of goods, can be considered as part of the company’s sales- and distribution business, and is therefore not covered by the definition of preparatory and auxiliary activities.

Whether the use of an employee’s home office may constitute a permanent establishment in Norway has so far not been tried by the tax authorities. However, as Norway adheres to the OECD’s Model Tax Convention and the Commentary, practice from other territories may provide insight into how the Norwegian tax authorities will handle similar cases. From Danish case law, it was deemed of significant importance if the employer had any commercial interest in the presence in Denmark, or if it was solely in the employee’s interest. As such, home office in Norway should be evaluated prior to commencing in order to limit the possibility of a permanent establishment. 

Norway levies withholding taxes. The statutory withholding rate on dividends is 25 %, which may be reduced under the exemption method or by an applicable tax treaty. To qualify for the exemption method, the recipient of the dividends has to be a corporate investor resident in an EEA country and must fulfil certain substance requirements.  

The main principle in Norwegian tax law is that all transactions entered into by related parties are required to be entered into on smiliar terms and conditons as independent parties (I.e., the arm’s length principle). This applies to both domestic and cross-border transactions. The Arm’s Length Principle and the guidance set out in OECD Transfer Pricing Guidelines are incorporated in the Norwegian tax legislation through a general reference to OECD’s TP Guidelines in the Norwegian Tax Act.

Consequently, all changes to the OECD TP Guidelines as a result of the OECD BEPS project, are also applicable to Norwegian tax legislation, including guidance on transactions involving intangibles, intra-group services, cost contribution arrangements and other actions under the BEPS projects related to transfer pricing. The purpose of the clarification related to the general application of the arm’s length principle in the OECD TP Guidelines is to make sure that the internal pricing analyses correspond to where the value creation activities are conducted.

Enterprises or entities that are obligated to file tax returns or partnership statements have a duty to submit statements declaring the nature and scope of transactions and outstanding accounts with related parties or entities. “Related” usually means an ownership or control interest of at least 50 %. However, there is an exemption for the obligation to prepare and file such statements for related companies if their number of employees, income and balance is lower than certain amount. This exemption does not apply to enterprises subject to the special tax on petroleum.

Transfer pricing documentation does not need to be filed with the tax authorities unless this is requested. Upon request from the Tax Authority, transfer pricing documentation is to be filed within 45 days. The transfer pricing documentation may be filed in Norwegian, Swedish, Danish, or English.

Mechanisms available to prevent and/or to resolve transfer pricing disputes are bilateral and multilateral Advanced Pricing Agreements (APA), Mutual Agreements Procedures (MAP) and enhanced engagements programs. 

Multinational enterprises with consolidated income of more than NOK 6.5 billion a year, must file a report with aggregate information about the activity in all countries they conduct business. The Country-by-Country-report is to be submitted 12 months after the expiry of the fiscal year. The Country-by-Country Report must be filed in English.

In Norway, group companies are taxed as independent taxable entities. They are not taxed as a group. Instead, there are rules governing group contributions to the effect that companies within a tax-consolidated group may transfer income  to each other with tax effect. Group contributions are deductible for the contributor and taxable for the recipient. Certain assets can also be transferred intra group without triggering any tax liability, provided that certain conditions are met.

A common direct and indirect (including foreign) ownership threshold greater than 90 % is required in order to qualify as a tax-consolidated group.

Norwegian group contribution rules are applicable between Norwegian companies, and under certain conditions, also to Norwegian branches of foreign companies that are resident within the EEA. 

Subject to certain prescribed conditions, mergers and demergers may be carried out exempt of tax and stamp duty. The condition for exemption is that the companies involved are resident in Norway. As a result of the EEA Agreement, tax deferrals are allowed on cross-border mergers and demergers within the EU/EEA.

Employers are required by law to pay social security contributions. Social security contributions are calculated based on gross pay and other remunerations paid to employees. The rates for calculating social security contributions vary between different regions throughout the country: from 0 % to 14.1 %. The standard rate is 14.1 %.

Furthermore, an additional national insurance contribution of 5 % is levied on employment income over NOK 850,000, as proposed in the National Budget for 2024.

In addition, a financial activity tax on salary for employees in the finance and insurance sector is levied at 5 %.

Social security agreements may exempt the employer from the social security contribution. 

The Norwegian tax system is based on the principle of self-declaration. All taxpayers must endeavour to promptly report and settle their tax obligations. The income year follows the calendar year, and tax returns must be submitted by 31 May in the following year.

Deficient or incorrect information may incur additional tax of up to 60 %.

Specific tax regulations apply for offshore activities related to the petroleum industry in Norway and on the Continental Shelf. Such activities incur a liability to pay tax to Norway from day one, regardless of the existence of a permanent establishment. Subsequent application of tax liability may follow from tax treaties. Many tax treaties provide that tax liability applies once an activity exceeds 30 days during a 12-month period. 

The income tax under the Norwegian Petroleum Tax Act comprises the ordinary corporate tax rate of 22 % and a special tax rate of 56 %. To compensate for high tax rate, there are extensive tax deductions, and the state gives companies in a loss position a cash refund of the taxable value (78 %) of the exploration cost or the loss may carry forward with interest. 
When calculating the taxable gross income from the sale of crude oil, a norm price replaces the actual sales price, regardless of the actual sales price being higher or lower. There is no dividend withholding tax on distribution from profits subject to the special tax of 56 %.

A special tax regime affords shipping companies exemption from taxation of profits derived from shipping activities. An annual tonnage tax is levied on the shipping companies’ own or chartered tonnage (including years when a shipping company shows a loss). Financial income and financial expenses fall outside the scope of this tax exemption scheme. Requirements are set as to which activities and assets companies in the tonnage tax scheme may and must have.

Specific tax regulations apply for hydroelectric power production companies. In addition to the income tax rate of 22 %, they are subject to 37 % natural resource tax. Further, the hydroelectric power production companies are subject to a municipal resource extraction tax of NOK 0,013 per produced kwh. 

For financial institutions, the corporate tax rate is 25 %. In addition, financial institutions have a 5 % tax imposed on their total salary costs. 

With some exceptions, stamp duty is levied on real estate transfers. The stamp duty is currently 2,5 % of the market value of the real estate.

The SkatteFUNN Tax Deduction Scheme is a rights-based tax deduction scheme designed to stimulate research and development (R&D) activities in Norwegian companies. Companies eligible for SkatteFUNN funding has a right to direct deduct from tax for a percentage share of their expenses attributable to research and development projects.  If the deduction exceeds the assessed tax, the surplus amount will be paid via the tax assessment. 
The deduction from tax is in addition to normal income deduction for R&D expenses. 
All companies that are registered with an enterprise organisation number in the Brønnøysund Register Centre and are subject to taxation in Norway, may apply for SkatteFUNN funding. To be covered by the scheme, the Research Council of Norway must approve research and development projects. 

Persons who are physically resident in Norway are taxed on the principle of worldwide income. Physical persons who are not resident in Norway are taxed on income derived from sources in Norway.

Citizenship has no bearing on whether an individual is deemed to reside in Norway. The concept of “place of residence” refers to a stay in a country and the duration of the stay. An individual is deemed to reside in Norway if he or she stays in the Kingdom for more than 183 days during a twelve-month period or for more than 270 days over a thirty-six-month period.

When a person is moving out from Norway, the individual will be resident until the first year they are not staying in Norway for more than 61 days during the income year and not has a residence at their disposal. For a person who has been in Norway for a minimum of ten years, the individual must fulfil the above-mentioned conditions for three years, before the residence is ceased to exist from the fourth year.

An individual who is resident in Norway, may at the same time be resident in another country. If there is a tax treaty between Norway and the country, the dual residence will be determined by the tax treaty provisions of residency and avoidance of double taxation.  

The standard tax rate is 22 % on general income. In addition, incremental surtaxes of between 1.9 % and 17.5 % is imposed on employment income and business income (personal income). The maximum effective marginal tax rate is therefore 39,5 %. 

Individuals, including non-resident receiving remuneration for services performed in Norway, become member of the National Insurance Contribution Scheme and liable for social security contributions. The rate for employees is 7,8 % and for self-employed person is 11 %. The rate is levied on the personal income base. Foreigners may be exempted from social security contribution, wholly or partly, according to a social security agreement with their home country or the EEA agreement, upon application, provided they are member of a similar insurance scheme in their home country.   

The PAYE scheme is a simplified and voluntarily tax scheme for foreign workers. A fixed rate – 25 % or 17,2 % (if not a member of the National Insurance Contribution Scheme) – is deducted by the employer. The tax is settled upon salary payment and no tax return or ordinary tax assessment is required. The PAYE scheme only applies for foreign workers that work onshore and earn less than NOK 670 000 per year and have capital gains below NOK 10 000.  

Capital income is subject to 22 % income tax. Gains on shares are adjusted by 1,72 before being taxed at the rate of 22 % income tax. Thus, the effective tax rate on gains on shares is 37,84 %. 

Physical persons residing in Norway are liable to pay tax on dividends received. The dividend received is grossed up by a factor of 1,72 when determining the taxable income that are taxed at the rate of 22 %. Thus, the effective tax rate on dividend is also 37,84 %.

However, a deduction is allowed: a so-called “skjermingsfradrag” (deductible risk-free return) on taxable dividend payments. Explained simply, the deductible risk-free return represents the original cost of the shares multiplied by a stipulated deductible interest rate. The deductible interest rate must constitute an almost risk-free interest rate and is set every other month based on treasury bills with three months’ maturity.

Loans to physical shareholders are, for tax purposes, deemed to be dividends. A few exceptions apply.

Physical persons who do not reside in Norway must pay tax on dividends from companies’ resident in Norway. The withholding tax rate is 25 % unless otherwise agreed under tax treaties. Physical persons residing outside the EU/EEA may be allowed deductible risk-free returns subject to application.

Similar rules apply for the distribution of dividends from partnerships. Physical partners are entitled to deductible risk-free returns on taxable dividends.

Employment income derived from Norway must be reported every month. The reporting requirement applies regardless of tax liability. On disbursement of pay, tax liabilities must be withheld in accordance with the tax deduction card or at the rate of at least 50 % in the absence of a tax deduction card. The employer, or the contractor in the case of hiring-out of labour, is jointly and severally responsible for withholding tax.

Tax withholdings are regarded as the employee’s assets, and until paid, such assets must be placed in a tax withholding account that is legally protected from the employer’s creditors. Alternatively, other forms of security may be furnished to cover tax withholdings that are due at any given time.

Employees are obligated to file Norwegian tax returns. The obligation to file a tax return applies regardless of whether a tax liability exists. Foreign nationals will normally be asked to complete a questionnaire, and the issue of tax liability is decided by the tax authorities on the basis of this in connection with a tax assessment conducted in the following calendar year.
The employee will receive a pre-drafted tax return from the tax authorities to be controlled, corrected, and filed by April 30 on the following year after the income year. In cases where no amendments of the pre-drafted tax return need to be made, filing is not required, and the tax assessment will be based on the information in the pre-drafted tax return.
Individuals on source tax (PAYE) are not required to file a tax return.
A taxpayer can alter their personal tax assessment three years after the ordinary deadline. 

Updated list of tax treaties between Norway and other countries. 

Norwegian value added tax (VAT) is a non-cumulative, multi-stage consumption tax. Value added tax is charged on sales and withdrawals taking place within the Norwegian territory, and on imports of goods and services to Norway. As in most OECD countries, Norway has based its VAT model on the indirect subtraction method.

The standard rate is 25 %. A reduced rate of 15 % applies on food and non-alcoholic beverages bought in stores, and a lower rate of 12 % applies on amongst other, passenger transport, hotel accommodation and cultural events like on cinema and entering tickets into museums. 

Business entities, both Norwegian and/or foreign entities, are obligated to register in Norway when supplies of goods and/or services to Norwegian customers take place within Norway, alternatively withdrawals covered by the VAT Act, exceed NOK 50,000 during a 12-month period. For business activities that are performed by charitable or volunteer institutions and organisations, the registration threshold is NOK 140,000.

The obligation to register for VAT for foreign businesses that do not have a permanent establishment in Norway, must be done through a VAT representative, unless there is a tax information agreement between the Norwegian government and the government where the foreign business is established.

The obligation to register for a foreign entity doing business in Norway, does not apply when the supply is a service capable of delivery from a remote location and the customer is a non-private business entity or a governmental public body. In such case, the obligation to calculate Norwegian VAT rests upon the Norwegian business customer, see below.  

On the other hand, foreign entities delivering electronic services to Norwegian private consumers must register for VAT in Norway. A simplified registration scheme called VOEC (VAT on e-commerce), applies to such services. This also includes the supply of goods with a value less than NOK 3000 when bought from an internet-based foreign business. The special scheme applies both for VAT and excise duties. VOEC does not apply on the supply of food, alcoholic beverages, tobacco products or other customs restricted products from abroad.

VOEC discharges the foreign supplier from the ordinary VAT obligations that apply to general VAT registered businesses in Norway, e.g.  to file VAT returns six times a year, keep a proper VAT account in accordance with Norwegian Accountancy law etc. The simplified registration schemes implies that VAT is included in the price offered by the supplier and the VAT due is to be reported quarterly by the supplier through the scheme. The scheme does not include any right to refund of input VAT. The foreign supplier may, however, opt to register according to the general rules, if the requirements are met, in order to benefit also from the VAT credit rules.
For business activities such as lease of buildings and installations, this is defined outside the scope of VAT. However, there is an option to voluntarily register for VAT under such activities.

Even if the ordinary registration threshold is not reached, advance registration may be approved if significant procurements (NOK 250,000) are made, which can be proven to be directly linked to subsequent taxable supplies within Norway, or if it is proved that such supplies will take place and exceed the threshold within three weeks from when sales begin to take place.

Registration of a foreign entity is normally done by using the same form used for registering Norwegian business entities. See www.brreg.no/how-to-register-a-foreign-business.

This also includes businesses that need a VAT representative to be registered for VAT. The VAT representative also has to be registered in the general Norwegian Business Register. 

If a registration takes place using a VAT representative, the VAT representative is, as a general rule, jointly responsible to report and pay the VAT towards the Norwegian tax authorities. In practice this normally requires a guarantee or deposit to cover any unpaid tax from the foreign entity.

The VAT representative is obliged to keep a complete VAT account that meet the requirements laid down in the Norwegian Bookkeeping Act. A Norwegian company may provide bookkeeping services for another company in the same group, which means that a Norwegian company in an international group may act as the VAT representative on behalf of a foreign group which has taxable sales in Norway.

The joint responsibility does not apply to foreign entities originating from an EEA state that under a tax treaty or other international treaty with Norway, has agreed to exchange information and assist with the enforcement of VAT claims. In such cases, the taxable entity may register for VAT directly in Norway, without a VAT representative. However, the entity must register in the Norwegian Business register and a person holding a Norwegian personal identity number or a D-number (an ID number for foreign persons), has to be reported as representing the company.

Services subject of reverse charge delivered from a foreign company to a Norwegian customer, being a registered business or public body, does not require VAT registration in Norway of the foreign supplier. The supply is subject to reverse charge which implies that the buyer calculates and reports the VAT. Services subject to reverse charge are services capable of delivery from a remote location; typically, electronically delivered services like consultancy services, legal services, advertising services, electronic services. The reverse charge mechanism applies also to remuneration for the hire of manpower. It does not apply however, to constructions services delivered by foreign entities, to Norwegian customers.  

Export is in general zero-rated and so is services which can be delivered from a remote location, as mentioned, from a Norwegian Entity to a foreign business not registered in Norway. 

Deduction is permitted for input VAT, i.e., VAT on purchases of goods and/or services within Norway and which are for use in the Norwegian VAT registered entity and within its activities liable for VAT. Purchases done for use both within and outside the scope of VAT liable activities, only give the right to proportional deductions.

Adjustments must be made on VAT deductions related to capital goods, typically on construction works related to real estate, when the use within or outside the VAT liable activities is changed. The adjustment period is ten years for buildings and constructions and five years for other capital goods. There are specific documentations requirements related to VAT and the acquirement of such capital goods.

The right to deduct input VAT has to be legitimised by original invoices. Deduction of VAT is excluded on certain purchases, such as on food and beverages, works of art and antiques, and on cars (unless when intended for sale, rent, or passenger transport services).

Foreign business entities that do not have any supplies in Norway and thus are not obliged to register for VAT may be entitled to refunds of input tax on costs that incur in Norway. This is provided that: 

• The VAT cost is on the purchase or import of goods or services within the Norwegian geographical area and they are meant for use in a VAT liable business activity; 
• The VAT liable activity would have required VAT registration or entitled voluntary registration if the sales had been conducted within Norway; and 
• The input VAT would have given right to deduction if the foreign business entity had been registered for VAT in Norway. 

The VAT returns must usually be submitted every second month. Business entities with supplies under MNOK 1, may apply to submit VAT returns on an annual basis.

Central legislation governing working life includes the Working Environment Act, the Annual Holidays Act, and the Act relating to Mandatory Occupational Pensions. The Working Environment Act contains provisions on working environment, working hours and contractual protection, regulations governing temporary employees, posting of workers, transfers of undertakings, dismissals with and without notice, and procedural law governing termination of employment relationships. The Annual Holidays Act contains provisions securing employees’ rights to holiday and holiday pay. The Act relating to Mandatory Occupational Pensions contains provisions requiring most employees to provide an occupational pension scheme for their employees.

All employment relationships must be formalised by a written employment contract. 
The Working Environment Act requires that employment agreements must contain details regarding conditions that are significant to the employment relationship, such as: 
 

• the identity of the parties. 
• the place of work. If there is no fixed or main place of work, the contract of employment shall provide information to the effect that the employee is employed at various locations and state the registered place of business or, where appropriate, the home address of the employer.
• a description of the work or the employee’s title, post or category of work. 
• the date of commencement of the employment relationship. 
• the expected duration of an employment relationship of a temporary nature.
• provisions for trial periods, if appropriate. 
• the employee’s right to holiday and holiday pay and provisions concerning the setting of dates for holidays. 
• the periods of notice applicable to the employee and the employer. 
• the pay applicable or agreed on commencement of the employment, any supplements and other remunerations not included in the pay, for example pension payments and allowances for meals or accommodation, method of payment and payment intervals for salary disbursements. 
• the duration and disposition of the agreed daily and weekly working hours. 
• length of work breaks. 
• agreements concerning special arrangements for working hours. 
• information concerning any collective pay agreements regulating the employment relationship. If an agreement has been concluded by parties outside the undertaking, the contract of employment shall state the identities of the parties to the collective pay agreements.

Pursuant to the Working Environment Act, the maximum limit for normal working hours is nine hours during a 24-hour period and 40 hours during a seven-day period. The employee and employer may, however, reach agreement to distribute the working hours so that the employee works ten hours during a 24-hour period and 48 hours during a seven-day period, for up to one year.

For groups with unsocial working hours, such as shifts, rotas and Sundays, the limits are 38 hours per seven days for work carried out 24 hours a day on weekdays, and 36 hours per seven days for work carried out 24 hours a day during weekends.

Overtime work and additional work are only allowed if necessitated by specific time pressures. The maximum limit on overtime work is 10 hours per seven days, 25 hours per four consecutive weeks, and 200 hours during a 52-week period. Higher limits may apply under collective agreements or subject to application to the Labour Inspection Authority.  A minimum supplement of 40 % of the agreed hourly rate applies for overtime work.

The general rule is that employees must be employed on a permanent basis. Temporary employment is nonetheless permitted in certain circumstances, for example when necessary due to the nature of the work and when the work differs from that which is ordinarily performed in the enterprise, or when the work is performed for another person or persons (temporary position). Temporary employment with a duration of up to 12 months on general grounds is permitted – although subject to quarantine and quota restrictions.

Temporary contracts expire automatically on the agreed completion date. If a temporary appointment lasts more than one year, the employee is entitled to receive one month’s written notice of when the appointment will be terminated. An employee who has held a temporary appointment consecutively for more than four years in the same enterprise is regarded as a permanent employee. 

Under the Annual Holidays Act, all employees are entitled to 25 working day’s holidays leave every year. Saturdays are included as working days, so that under the law employees are entitled to four weeks and one day of holiday leave per calendar year. However, five weeks per year is usual. Employees have the right and obligation to take their full holiday entitlement, and employers are obligated to ensure that employees take their full holiday entitlement.

Employees are entitled to holiday pay. Holiday pay must be equivalent to at least 10.2 % of the basis for calculating holiday pay. The basis for calculating holiday pay is the wages earned during the qualifying year, which is usually the year preceding payment of holiday pay. In the case of five weeks’ holiday regulated by contract, the holiday pay rate must be equivalent to a minimum of 
12 %.

Employees over the age of 60 are entitled to one additional week of holiday leave. The rate of holiday pay for these employees is 12.5 %, or 14.3 % in the case of a contractually agreed fifth week of holiday leave. 

The Act relating to Mandatory Occupational Pensions is intended to secure employees a pension in addition to national insurance benefits. Most employees are obligated to establish an occupational pension scheme for their employees. The pension scheme may be a defined-contribution or a defined benefit scheme. Employers must pay annual contributions to the scheme. Contributions must be equivalent to a minimum of 2 % of the employee’s earnings between 0 G and 12 G (G= the National Insurance basic amount). 

The Working Environment Act contains stringent provisions regulating termination of employment relationships. This article covers only the main features.

In order to be legally valid, notice of termination must be in written form and objectively justified. An example of justified termination may be for gross breach of the employment contract on the part of the employee. An example of termination justified by the employer’s/enterprise’s circumstances may be for reasons of workforce reductions or reorganisation.

Unless otherwise agreed, a mutual notice period of one month applies. For employees who have been employed for more than five years, the minimum notice period is between two and six months, according to the length of service and age of the employee.

For the CEO of a company exceptions from the justification requirement and the notice period requirement may be agreed upon, but only if the CEO is compensated with severance pay.

Competition clauses are strictly regulated, and compensation rules apply.

Several of the provisions in the Working Environment Act also apply to foreign employees who are posted to Norway to perform work there. This means that foreign employers who send employees to Norway must comply with Norwegian regulations regarding covering conditions such as employment contracts, working environment, working hours, overtime, holidays, and equal opportunities. Certain exceptions apply when the period of the posting does not exceed eight days.

For work falling under generally applied wage agreements, employers are obligated to provide compensation and working conditions that align, at the minimum, with the standards set forth by the relevant regulations overseeing the widespread implementation of these wage agreements. Regulations on general application of wage agreements apply for construction workers, the shipping and shipbuilding industries, the agricultural and horticultural industries, and cleaning service providers. 

All enterprises that perform work on building and construction sites, both Norwegian and foreign, are required to provide their employees with HSE cards before the employees are granted access to the construction site. These cards are ordered online via a specific website. Foreign enterprises must register a person who is authorised to order the HSE cards. The requirements pertaining to the role of assigned order do not permit the ordering of HSE cards to be transferred to an external service provider. A fee is charged for issuing HSE cards.

When an enterprise that is not resident in Norway performs a contract or subcontract in Norway or on the Norwegian Continental Shelf, the tax authorities must be duly notified. Both the client and the contractor are responsible for providing information on their own initiative regarding the employees that are used to perform an assignment in Norway. Such information must be provided as soon as possible and within 14 days after work on the assignment has commenced. Deficient information may incur a daily penalty for failure to pay taxes and employer’s national insurance contributions.

Pursuant to the Norwegian Accounting Act, foreign enterprises that perform and participate in activities in Norway and are liable to pay tax to Norway under Norwegian domestic law, are obligated to keep accounts. This means that financial statements and annual reports must be prepared every year. Exemptions apply in cases where an enterprise is temporary in nature or for enterprises with sales revenues of less than NOK 6 million. The Register of Company Accounts must be notified if the exemptions apply, and the enterprise has sales revenues above NOK 6 million within the Norwegian tax jurisdiction.

The accounting obligation entails a bookkeeping obligation pursuant to the Bookkeeping Act. This means that all transactions that have significance for the assets, liabilities, income, and expenses of an enterprise that is legally obligated to maintain accounting records must be registered in an accounting system. Note that the bookkeeping obligation may still apply even if an exemption has been granted from the obligation to prepare financial statements and annual reports.

The Bookkeeping Act requires that all accounting material must be stored in Norway. However, under certain circumstances it is possible to apply for dispensation to store such records outside Norway. 

All foreign enterprises that are obligated to keep accounts under the Accounting Act and that have at least NOK 6 million in sales revenues are obligated to engage a Norwegian auditor in the year after revenues have exceeded this amount.

Source: Ministry of Finance