Why do I have to declare whether the company or entity primarily has passive income?

Whether the company or entity is considered to be active or passive is important as regards whether the financial institution must record information regarding where the beneficial owners/controlling persons are resident for tax purposes or whether they are US citizens.  This information must be recorded if the company or entity is considered to be passive. 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.