Dividends from Norwegian companies to foreign shareholders

No longer comprised by the exemption method

From 1 January 2021, Norway's relationship with the United Kingdom is no longer regulated by the EEA Agreement. This means that certain corporate shareholders resident in the United Kingdom are no longer comprised by the exemption method (section 2-38 of the Norwegian Tax Act). Consequently, they're not entitled to exemption from withholding tax under the exemption method after this date.

Special provisions in the tax treaty

Corporate shareholders can be entitled to a reduced or 0 percent withholding tax rate according to the double taxation treaty between Norway and the United Kingdom. Under the treaty, the tax rate is usually reduced to 15 percent. Certain corporate shareholders may be entitled to a 0 percent tax rate if they fulfil the requirements under a special provision in the treaty.

Corporate shareholders that directly or indirectly owns at least 10 percent of the capital in the Norwegian distributing company may be entitled to a 0 percent withholding tax rate according to Article 10, no. 2, letter b (i) in the tax treaty.

Approved pension schemes may be entitled to a 0 percent tax rate pursuant to Article 10, no. 2, letter b (ii), and the same applies to parts of the British Government as described in Article 10, no. 3, letter b (ii).

Corporate shareholders must provide documentation showing they fulfil the conditions under a special provision in the treaty.

Read more about tax and VAT implications of Brexit.

• Name
• Address
• Tax Identification Number (tax ID/TIN)
• Legal basis: You must specify in the application whether you apply for a reduced withholding tax rate under a tax treaty or exemption from withholding tax pursuant to the exemption method (section 2-38 of the Norwegian Tax Act)
• If you apply under a tax treaty:
• A certificate of residence, issued by the tax authorities in the shareholder's country of residence, specifically confirming that the shareholder is a tax resident there in accordance with the relevant tax treaty with Norway. The certificate must not be older than six months.
• If you claim a reduced withholding tax rate according to a special provision in the tax treaty, you must specify this in your application.
• If you apply under the exemption method:
• A certificate of residence or a registration certificate, showing that the shareholder is resident in an EEA country. The certificate must not be older than six months.
• A statement naming the shareholder's legal entity type, including an assessment of which Norwegian entity type the shareholder is comparable to as set out in section 2-38, subsection 1, letter a-h, of the Norwegian Tax Act.
• A statement explaining why the shareholder should be considered as genuinely established and carrying out genuine economic activity within the EEA area, see section 2-38, subsection 5, of the Norwegian Tax Act.
• The application must be signed by the shareholder
• If a representative submits the application, the representative must provide a power of attorney signed by the shareholder. If you use our application form, a signature from the shareholder is sufficient as long as the representative's name and contact information is stated under item 2 in the application form.

• A change in organisational form
• Change of business address to another country
• Mergers and demergers, sale of shares and other transactions that change the legal structure and ownership
• Changes in the establishment's purpose/objectives as set out in operating documents (for example articles of association)

• Change of the establishment's name
• Change of business address within the same country

• The custodian must only register shares on a nominee account in VPS with a reduced withholding tax rate on behalf of a final dividend recipient after having received documentation in accordance with section 5-10a-1 of the Tax Payment Regulation
• The custodian must make sure the documentation is renewed within the deadlines set in the regulation
• The custodian must provide information about the final dividend recipient when requested by the Norwegian Tax Administration in accordance with section 5-10a-2 of the Tax Payment Regulation
• The custodian must make sure that nominee accounts in VPS are marked with "NOM"

• ID from the Financial Supervisory Authority of Norway (Finanstilsynet ID)
• A confirmation from the custodian that they're familiar with the documentation requirements for a reduced or 0 percent withholding tax rate on dividends, and with the conditions of the permit as they're stated in section 5-10(a) of the Tax Payment Regulation
• A copy of the license issued by the Financial Supervisory Authority of Norway, stating that the custodian is authorised to be registered in a Norwegian securities register. Alternatively, a reference to the Financial Supervisory Authority of Norway's registry where it's stated that the custodian has such authorisation.

Shareholders who own shares registered on a VPS account in a foreign custodian's name (NOM account) must provide the documentation to the foreign custodian.

Shareholders who own shares on a VPS account registered directly in the name of the shareholder, must provide the documentation to the account operator for investor. The account operator for investor is the one who sets up and administrates the VPS account. If the VPS account is set up by a foreign custodian, and the shares are registered directly in the shareholder's own name, the shareholder must present the documentation to the foreign custodian. 

If the shares are not registered in VPS, the shareholder must provide the documentation directly to the Norwegian company.

The documentation must not be submitted to the Norwegian Tax Administration.

The custodian/account operator can store the documentation electronically. It is not necessary to keep paper documents.

If the shareholder changes their name, and the documentation that's provided is in the shareholder's former name, the shareholder must provide a confirmation of name change. The confirmation must be presented to the custodian or account operator, in addition to the other documentation. It is not necessary to apply for a new pre-approval. There are no requirements to the format of the confirmation of name change.

Compared to companies registered in VPS, it's often easier for companies not registered in VPS to gather information on the shareholder's identity and tax status. This is because it's easer for these companies to communicate with the shareholder directly.

If the company is familiar with the shareholder's identity and tax status, and is able to confirm that the shareholder is entitled to a reduced withholding tax rate at source, the shareholder does not need to fulfil the documentation requirements.

Note: If the company misjudges the shareholder's identity and tax status, the company can be held liable for incorrect withholding tax deductions. The company will not be held liable if the shareholder meets the documentation requirements.

The certificate of residence is initially valid for three years after the date it's issued. If the certificate is issued for prior income years, its validity is calculated from the end of the relevant year. If the certificate refers to a specific period between two dates, the document must be renewed within three years from the end date on the certificate.

• Example 1: A certificate of residence issued for the income year 2018, dated 1 November 2018, must be renewed by 1 November 2021.
• Example 2: A certificate of residence issued for the income year 2015, dated 1 November 2017, is valid from 31 December 2015. The certificate must be renewed by 1 January 2019.
• Example 3: A certificate of residence issued for the period 31 August 2018 to 31 December 2018 must be renewed by 31 December 2021.

The amount limit of NOK 10,000 applies for all ordinary dividends received in the income year in total. For companies that normally distribute dividends more than once during the year, the amount limit of NOK 10,000 is divided by the number of ordinary dividend payments. A new limit of NOK 10,000 will apply for extraordinary dividend payments.

• Example 1: The shareholder receives a dividend payment from a company that only distributes one ordinary dividend per year. The shareholder must only provide a certificate of residence if the dividend is NOK 10,000 or more. The shareholder can receive extraordinary dividends in addition to the ordinary dividend, but must then provide a certificate of residence if the extraordinary dividend amount is NOK 10,000 or more.
• Example 2: The shareholder receives dividend from a company that distributes four ordinary dividends during a year. The shareholder must provide a certificate of residence if one of the dividends is NOK 2,500 or more, even if the dividends amount to less than NOK 10,000 in total.

The main rule is that the certificate of residence must always refer to the relevant double taxation treaty with Norway. Documentation without such reference may only be accepted in special cases, for example when the tax authorities in a country of residence will not issue such a certificate under any circumstances.

The tax office is familiar with the American tax authorities' (IRS) practices in that they do not issue certificates of residence referring to the tax treaty. Certificates of residence from the IRS will still be sufficient documentation of residence according to the tax treaty between the United States and Norway.

The documentation requirements also apply for supranational organisations.

As an alternative to a pre-approval or a decision letter on refund of withholding tax, supranational organisations can provide reference to a treaty that explicitly states that the entity is exempt from tax in the member states.

Foreign custodians with a permit to register shares on nominee accounts (NOM accounts) with a reduced withholding tax rate according to a tax treaty can also register shares on accounts with a reduced or 0 percent tax rate on behalf of supranational organisations.

This applies even if the permit to register shares on an account with a lower tax rate does not explicitly mention such entities.