If a company or self-employed person resides in a country with which Norway has entered into a tax treaty, the condition for tax liability in Norway is that the business income originates from business activity that is carried on through a permanent establishment in Norway.

A ‘permanent establishment’ means that the company or self-employed person has a fixed place of business through which they run the business all or some of the time. The business must also have been operating for a sufficient period of time.

Examples of permanent establishments are:

• a place of management
• a branch
• an office
• a factory

Construction and engineering
Construction and installation projects and activity linked to such projects constitute a permanent establishment only if the project or activity lasts for more than 12 months. Under some tax treaties, the time requirement is six months.

Auxiliary activity
Tax treaties normally include an exemption stating that ‘auxiliary activity’ doesn't constitute a permanent establishment. One example of auxiliary activity is where premises are exclusively used to store or display goods.

Agents
When a person who is not an independent agent acts on behalf of an enterprise and has the authority to close contracts on behalf of this enterprise, the enterprise will be deemed to have a permanent establishment.

The continental shelf
Activity on the Norwegian continental shelf is subject to a separate tax regime pursuant to the Petroleum Tax Act.

Most tax treaties that Norway has entered into with other states include special provisions concerning tax liability for income linked to activity on the Norwegian continental shelf. Under these provisions, activity that exceeds 30 days over the course of any twelve-month period normally constitutes a permanent establishment.

In a limited number of tax treaties, the tax liability is subject to the general rules concerning permanent establishments. When there is no tax treaty or when the tax treaty doesn't cover the Norwegian continental shelf, the Petroleum Tax Act covers the tax liability in Norway.