Depreciation

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Fixed assets which are expected to be used for more than three years by an enterprise and which have an acquisition cost exceeding NOK 15,000 excluding VAT must be depreciated. This means that the cost will not be deducted in full during the acquisition year, but distributed over a number of years.

As regards tax, the enterprise must use the balance method, which entails a high rate of depreciation (cost) during the first year and gradually decreasing depreciation during the subsequent years. Section 6-10 of the Tax Act stipulates maximum depreciation rates for different types of fixed assets. Enterprises that implement depreciation must submit "Avskrivning" RF-1084 (Depreciation - in Norwegian only) as an attachment to the tax return.

Temporary differences

Enterprises can opt to use a different type of depreciation in their financial accounts compared with what they are required to use in their tax accounts. Differences can then arise in depreciation amounts and capital values between the financial accounts and the tax accounts. Such differences are known as ‘temporary differences’. These temporary differences represent a capital or liability item in the accounts, while the change in temporary differences from one year to the next will impact on the calculated tax. Enterprises that use different depreciation methods in their financial accounts and their tax accounts must submit form RF-1217 "Forskjeller mellom regnskapsmessige og skattemessige verdier” (Differences between accounting and tax values - in Norwegian only) as an attachment to the tax return.

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