Institutions, organisations, companies, associations, foundations, etc. which have their own board of directors are considered to be separate tax entities; see Section 2-2 first paragraph of the Tax Act. Local groups and sections of organisations (such as a local branch of the Norwegian Red Cross or a football group in a sports club) will be considered separate tax entities if they have their own board of directors and prepare their own accounts.
Organisations which do not have a commercial purpose are exempt from income and wealth tax (“tax-free organisations”). If a tax-free organisation also carries on commercial activity, it will be taxable for assets and income relating to this activity. Nevertheless, commercial activity is exempt from any tax liability when the turnover of the activity does not exceed NOK 70,000 a year. In the case of charitable and benevolent institutions and organisations, commercial activity is exempt from any tax liability when the turnover of the activity does not exceed NOK 140,000 a year.
The tax exemption for tax-free organisations does not entail any exemption from liabilities and obligations as an employer. If a tax-free organisation has employees or pays fees or allowances to board members, it will have the same obligations as other employers. However, there are a number of special rules concerning threshold amounts for withholding tax obligation and salary reporting obligation which apply to all tax-free organisations. Charitable and benevolent institutions and organisations are also exempt from employer’s National Insurance contributions in connection with salary payments up to certain threshold amounts, and within certain limits, it is possible to use the simplified settlement scheme when making salary payments.