Why do financial institutions ask where a legal person is resident for tax purposes?

Norwegian financial institutions are obliged to record information regarding where customers that are companies and entities are resident for tax purposes. In cases where the customer is a company or entity that primarily has passive income, such financial institutions must also ask the customer where the company or entity's beneficial owners/controlling persons are resident for tax purposes and whether they are US citizens. Financial institutions must report this information, together with information relating to accounts, to the Norwegian Tax Administration annually in the same way as for information that must be precompleted in the Norwegian tax return.

The purpose of the rules is to ensure that the financial affairs and insurance policies (financial accounts) of foreign customers with Norwegian financial institutions are taxed correctly in the customer's home country. To ensure this, the Norwegian Tax Administration sends the account information to the tax authorities in the customer's home country.

The rules have been introduced based on international agreements that Norway has entered into with other countries.