Norway Tax & Business Guide - Deloitte

Basic facts
Population 4.6m Inflation 2.3% (2006)*
Main languages Norwegian GDP per head US$69,643*
Currency Norwegian krone (NOK) GDP growth 2.4% (2006)*
Economic communities European Economic Area, European Free Trade Association, OECD, WTO
GDP sources 2.3% agriculture, 37.4% industry, 60.3% services
*Economist Intelligence Unit estimates.
Political environment

Norway is a constitutional monarchy.

NorwayÌs centre-left opposition parties hold a majority in parliament. The Labour Party leader, Jens Stoltenberg, heads a new Ïred-greenÓ coalition, comprising the Labour Party, the Socialist Left Party and the Centre Party (a ÏgreenÓ party).
Foreign trade and investment
Exports US$122.6bn (2006)* Imports US$59.9bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: The UK, France, Germany, the Netherlands and Sweden.

Leading exports: Crude oil, natural gas and refined petroleum products, and manufactured goods.

Virtually all investment is in the oil sector. Norway offers a wide range of official incentives for investments, research and development (R&D) and exports.
Business and financing
Business forms Corporations, general and limited partnerships, individual enterprises

The usual form of organisation for foreign investors in Norway is the corporation, or aksjeselskap (AS). Less common are general and limited partnerships, individual enterprises and branches. Foreign firms prefer to work through foreign banks when raising capital.

Oslo (the capital) is the major banking centre, but the large banks have branches in other cities, especially Bergen and Stavanger, where the oil industry is based.
Labour environment
Unemployment rate 3.5% (2006)* Minimum wage None
*Economist Intelligence Unit estimate.

Unionisation is high, at 80-95% in major industries.

There is no national minimum wage; base wages are fixed in collective wage agreements.

EmployersÌ social contributions cover health, unemployment, disability and survivorsÌ insurance. Employees make social contributions through levies for pension and medical insurance.

Citizens of European Economic Area (EEA) member countries are exempt from immigration controls. The government wants to simplify the process for recruiting workers from abroad, including non-EEA nationals.
Taxation
Corporate tax
Main rate 28%

Resident companies are taxed on worldwide income; non-resident companies are taxed only on Norwegian-source income. Residence is not defined in the tax legislation, but in practice a company is regarded as resident if incorporated under Norwegian law. Corporate tax is charged at 28% on aggregate income. Dividends received by resident companies from Norwegian companies or companies situated in the EEA are exempt from tax. Dividends received from companies in non-EEA countries are exempt if 10% of the shares are held for two years, subject to certain conditions.
Individual tax
Progressive rates up to 55.3%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on their Norwegian-source income. A person who stays in Norway for more than 183 days during any 12-month period or more than 270 days during any 36-month period is considered to be resident, but not before the first calendar year where the thresholds are met.

The national and municipal income taxes are charged at a combined rate of 28%. The national income tax on gross income is charged at progressive rates up to 12%, and the employee contribution to social security is 7.8%.
Capital gains
Taxed as income

Capital gains of companies and individuals are generally taxed as income. Gains of a company from the disposal of a shareholding in another Norwegian (or EEA) company are exempt. Gains on the disposal of shares in companies in non-EEA countries are exempt if 10% of the shares have been held for two years, subject to certain conditions.
Indirect tax
Standard rate 25% Lower rates 13%, 0%

Value-added tax (VAT) applies to most transactions at the standard rate of 25%. A lower rate of 13% applies to most foodstuffs. Goods and services supplied for use in other countries, and supplies of most ships, aircraft and oilrigs, are zero-rated. Exemptions include financial services, the supply and lease of immovable property, passenger transport, hotel and accommodation services, and certain entertainment services. Foreign entrepreneurs who are not registered for VAT may be able to reclaim input tax paid in Norway subject to certain conditions.

Businesses with annual turnover above NOK 50,000 must register for VAT purposes.
Tax administration and compliance
Tax year Corporations: accounting year; Individuals: calendar year

The tax year is the same as the accounting year that, as a starting point, is the calendar year. A company that is a subsidiary of a foreign company can elect to use the same accounting year as its parent, as is the case for Norwegian branches of foreign companies. In a few (rare) cases, it may be possible to use an accounting year other than the calendar year.

Companies must make advance payments of tax, normally amounting to two-thirds of the previous yearÌs tax liability, in February and April following the year-end. Corporate tax returns are due by March 31st after the year-end for companies not filing electronically and by May 31st for companies filing electronically. A one-month extension will normally be granted upon application. Final payments of tax are due during the fall following the year-end.

Employment income of individuals is taxed by withholding. Individuals who are required to submit a return must do so by March 31st following the year-end. For individuals filing pre-completed returns (most Norwegian residents), the deadline is April 30th.
Additional tax information
Withholding taxes Dividends 25%, Interest and Royalties 0%. Rates may be reduced by tax treaty.
Tax treaties Norway has concluded more than 85 tax treaties.
Dividends Dividends are taxable, but with an imputation credit for the shareholder.
Revenue protection There is transfer-pricing and offshore subsidiary (CFC) legislation.
Groups Income may be transferred between group companies by group distributions.
Incentives Research and development credits.
Other taxes Capital duty, Immovable property transfers, Import duties, Municipal real estate tax, Net wealth tax, Petroleum revenue tax, Tonnage tax.