The general rule is that foreign enterprises that operate in Norway have a limited tax liability with respect to Norway, i.e. they only pay taxes to Norway in respect of their operations in the country. However, if the management at board level is based in Norway, the enterprise will be liable to pay taxes to Norway on all its income, regardless of where in the world the income is generated. The company will then be domiciled in Norway for tax purposes.
A foreign enterprise that is domiciled in Norway for tax purposes will be taxed according to the same rules and in the same way as a similar Norwegian company. For example, if a foreign enterprise is a company with limited liability, the rules which apply to Norwegian limited companies will apply.
Tax returns and other mandatory attachments
The company will be obliged to submit tax returns and income statements to the Norwegian tax authorities for the branch, or alternatively for the entire company if it is domiciled in Norway for tax purposes.
Obligatory forms which must always be submitted are:
If the company incurs depreciation, the following must also be submitted:
- Depreciation form for balance and linear depreciation (RF-1084)
- Differences between accounting and tax values (RF-1217)
If the company incurs salary expenses, the following must also be submitted:
Tax claims - payment liability
The company is obliged to pay tax on income generated by its operations in Norway.
Value added tax liability
Sales of goods and services are generally subject to value added tax (VAT). Commercial activity in Norway which is subject to VAT must be declared unsolicited for registration by the tax office when the turnover, etc. exceeds NOK 50,000 during a 12-month period. Such declarations must also be submitted when the activity ceases. The business must calculate and pay tax on the turnover and withdrawals. The tasks concerned must normally be performed every other month.
Before the start of the income year, the tax office will issue a tax deduction card stating the advance deduction amount and how the advance deduction will be carried out for all taxpayers who are expected to generate income subject to withholding tax of significance.
Employers are obliged to obtain tax deduction cards before the start of the income year for personal taxpayers for whom the employer is obliged to make advance deductions, and to ensure that the information given in the tax deduction card is up-to-date before each payroll run, so that the advance deduction is based on the most recently calculated tax deduction card.
Employers are obliged to make advance deductions on their own initiative in accordance with the rules in this chapter and the tax deduction card applicable at the time concerned.
Foreign employers subject to a reporting duty concerning contractual and employment circumstances using form RF-1199 should not submit information regarding employment circumstances in the a-melding. However, they must report income, deductions, prepayment deductions and employer's national insurance contributions in the a-melding for each month in which they make payments and deductions.
Accounting obligation and audit obligation
NUFs are subject to an accounting obligation if they operate or participate in activity in Norway and are liable to pay tax to Norway for this.
NUFs which are subject to an accounting obligation or which are obliged to submit income statements are also subject to a bookkeeping obligation. Bookkeeping must be carried out as often as appropriate based on the nature and scope of the activity and the transactions, and must be updated by the applicable deadlines for obligatory financial reporting (turnover statements, tax returns, etc.) and at least ever four months.
NUFs subject to an accounting obligation are also subject to an audit obligation if their operating revenues have exceeded NOK 5 million during the past twelve months.
If a taxpayer’s annual accounts are prepared in breach of provisions issued either in or pursuant to the Accounting Act or the Bookkeeping Act, or in breach of recommended accounting or bookkeeping practice, the tax authorities may require one or more sets of annual accounts to be audited by a registered or state-authorised auditor. This assumes that the NUF is organised in accordance with a foreign company form which largely corresponds to the definition of a private limited company.
Tax liability for shareholders in a company
Personal owners of an enterprise who are resident in Norway for tax purposes will be liable for tax on the capital value of shares in the company as of 31.12 of the income year. The capital value of unlisted shares in foreign-registered companies which are domiciled in Norway will be assessed at company level and taxed on the shareholders during the following year. The companies and shareholders will be obliged to provide information on the capital value when submitting their tax return.
Personal owners resident in Norway for tax purposes will also be taxable for dividends or gains made on shares or alternatively entitled to deductions for losses. Deductions, known as a risk-free return, are given from such share income. Owners resident abroad may be required to pay withholding tax on dividends if the foreign company is considered to be domiciled in Norway for tax purposes. If such owners are resident within the EEA, they will also be entitled to a risk-free return.
If the company is liquidated, the personal owners will be taxable for any liquidation surplus in the same way as if they had sold their shareholdings.
Cessation of activity and deletion of the company
Before a company is liquidated, advance assessment must be requested. The company's board must then submit a tax return covering the income and wealth for which advance assessment is being requested. It is the income up to the final liquidation date for which an advance assessment should be requested.
Companies which no longer carry on commercial activity in Norway or which are liquidated in accordance with the legislation of their home country are obliged to report deletion to the Register of Business Enterprises.
Tax liability for Norwegian NUFs: Tax Act, see in particular Section 2-2, Section 2-3 and Chapter 10.
Tax returns: Tax Administration Act, Section 8-1
Payment liability for the tax: Tax Payment Act, Section 6-2 and Chapter 9
Value added tax liability: Value Added Tax Act, see in particular Section 2-1, Section 3-1 and Chapter 15.
Employer obligations: Tax Payment Act, Chapter 5, see in particular Section 5-4 onwards National Insurance Act, Section 24-3 and Section 25-1.
Accounting and bookkeeping obligations: Accounting Act, Section 1-2 no. 13 Bookkeeping Act, Section 2 and Section 7.
Audit obligation: Auditor Act, Section 2-1.
Tax liability for personal owners: Tax Act, Section 4-12, Section 10-11 , Section 10-12, Section 10-13 and Section 10-31, Section 10-37
Advance assessment: Regulations pursuant to the Tax Administration Act, Section 8-2-4 second and third paragraphs
Enterprise registration and deletion: Register of Business Enterprises Act, Section 2-1 second paragraph and Section 4-1 sixth paragraph.