Documentation requirements for a reduced withholding tax rate on dividends

Here you will find information about:

  • The rules for withholding tax deduction on dividends
  • Documentation requirements for a reduced tax rate
  • How to apply for a pre-approval from the Norwegian Tax Administration
  • How to apply for a new permit to operate a nominee account in VPS (the Norwegian SCD) with a reduced tax rate

The rules as of 1 January 2019

If the Norwegian distributing company does not know the identity and tax status of the foreign shareholder (the final dividend recipient), the company must deduct 25 percent withholding tax on dividends.

However, the company may apply a reduced withholding tax rate according to a tax treaty, or refrain from deducting withholding tax pursuant to section 2-38, subsection 5, of the Norwegian Taxation Act, if the shareholder has provided documentation showing that they are entitled to a reduced withholding tax rate.

The shareholder must submit the documentation before the tax deduction. Normally, that means before the dividend distribution. The same documentation requirements apply for shares registered in VPS (the Norwegian Central Securities Depository) and shares not registered in VPS.

The documentation must not be submitted to the Norwegian Tax Administration. You can find information about who is the correct recipient of the documentation further down the page, under "More about the documentation requirements".

You can find the rules in section 5-10(a) of the Tax Payment Regulations (only available in Norwegian).

Corporate shareholders (final dividend recipients who are not private individuals) may be entitled to a reduced withholding tax rate according to a tax treaty and/or withholding tax exemption pursuant to section 2-38 of the Norwegian Taxation Act (the tax exemption method).

Documentation requirements for a reduced withholding tax rate according to a tax treaty

  • Documentation verifying that the shareholder is entitled to a reduced withholding tax rate according to a tax treaty, e.g. a decision on refund of withholding tax or a letter of pre-approval from the Norwegian Tax Administration.
  • Certificate of residence, issued by the tax authorities in the shareholder's country of residence, expressly confirming that the shareholder is resident there in accordance with the relevant tax treaty with Norway. The certificate must not be older than three years at the time of the tax deduction.
  • Confirmation from the shareholder that they are the beneficial owner of the dividend.

Documentation requirements for exemption from withholding tax pursuant to section 2-38 of the Norwegian Taxation Act

  • Documentation verifying that the shareholder is entitled to a withholding tax exemption pursuant to section 2-38 of the Norwegian Taxation Act, e.g. a decision on refund of withholding tax or a letter of pre-approval from the Norwegian Tax Administration.
  • Certificate of residence or a registration certificate, showing that the shareholder is resident in an EEA country. The certificate must not be older than three years at the time of the tax deduction.
  • Statement from the shareholder, confirming that the basis for the tax exemption status remains unchanged. The statement must not be older than three years at the time of the tax deduction.
  • Confirmation from the shareholder that they are the final dividend recipient.

Personal shareholders (final dividend recipients who are private individuals) can be entitled to a reduced withholding tax rate according to a tax treaty. In order to fulfil the documentation requirements, personal shareholders must provide the following:

  • Certificate of residence, issued by the tax authorities in the shareholder's country of residence, expressly confirming that the shareholder is resident there in accordance with the tax treaty with Norway. The certificate must not be older than three years at the time of the tax deduction.
    • Exception: If the distributed dividend amount per year is less than NOK 10,000, a certificate of residence is not required. The amount limit applies separately for each company in which the shareholder invests. A new amount limit of NOK 10,000 will apply for extraordinary dividend distributions.
  • Confirmation from the shareholder that they are the beneficial owner of the dividend.

Personal shareholders cannot apply for a pre-approval for a reduced withholding tax rate from the Norwegian Tax Administration.

Application for pre-approval

Corporate shareholders (dividend recipients who are not private individuals) can apply for a pre-approval from the Norwegian Tax Administration. A pre-approval substantiates that the shareholder is entitled to a reduced or zero percentage withholding tax rate according to a tax treaty or withholding tax exemption pursuant to section 2-38 of the Taxation Act (the exemption method).

This approval scheme allows shareholders to document their right to a lower withholding tax rate than 25 percent, without having to claim a refund of withholding tax.

A pre-approval does not have to be renewed, as long as the legal structure of the corporate shareholder does not change.

  • Name
  • Address
  • Tax Identification Number (tax ID / TIN)
  • If you apply under a tax treaty:
    • Certificate of residence, issued by the tax authorities in the shareholder's country of residence, expressly confirming that the shareholder is 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 tax exemption method:
    • 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.
    • Statement naming the shareholder's legal entity type, including an assessment of which Norwegian entity type the shareholder is comparable to in section 2-38, subsection 1, letter a-h of the Norwegian Taxation Act.
    • Statement explaining why the shareholder should be considered actually established and carrying on genuine economic activity within the EEA area, see section 2-38, subsection 5 of the Norwegian Taxation 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 included under item 2 in the application form.

Download and complete our application form for pre-approval:

Send the application to

Skatteetaten
Postboks 9200 Grønland
0134 OSLO

NORWAY

Foreign custodians must apply for a new permit to register shares on nominee accounts in VPS

Foreign custodians and account operators may still register shares on accounts in VPS with a withholding tax rate lower than 25 percent.

In accordance with the new documentation requirements, custodians must apply for a permit to operate a nominee account (NOM account) in VPS with a tax rate lower than 25 percent. Permits granted prior to the new regulations are no longer valid. Custodians who have received permits under former administrative practices, and who wish to continue to register shares on an account with a reduced tax rate, must apply for a new permit.

  • Confirmation from the custodian that they will provide documentation on each final dividend recipient upon request from the Norwegian Tax Administration
  • Copy of the permit issued by the Financial Supervisory Authority of Norway (FSA) to be registered as a custodian in VPS. Alternatively, a reference to the permit in the FSA's License Register.
  • VPS account number for the NOM account that is to be registered with a lower tax rate, if available.

 

Download and complete

Send the application to

Skatteetaten
Postboks 9200 Grønland
0134 OSLO

NORWAY

More about the documentation requirements

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 physical documentation.

If the shareholder changes their name, and the documentation 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/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.

It is often easier to gather information on the shareholder's identity and tax status for companies not registered in VPS than for those registered in VPS. This is because these companies have greater opportunity to communicate with the shareholder directly.

If the company is familiar with the shareholder's identity and tax status, and is thereby able to confirm that the shareholder is entitled to deduction with a lower withholding tax rate, 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. However, the company will not be held liable if the shareholder meets the documentation requirements.

Certificate of residence requirement

The certificate of residence is initially valid for three years after the date of issue. If the certificate is issued for prior income years, the 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 principal rule is that the certificate of residence must always refer to the relevant tax treaty with Norway. Documentation without such reference may only be accepted in special cases, e.g. when the tax authorities in a country of residence under no circumstance will issue such a certificate.

The tax office is familiar with the American tax authorities' (IRS) practices in that they do not issue certificates of residence that refer 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.

Supranational organisations

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 rate according to a tax treaty can also register shares on accounts with a reduced or 0 percent 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.

Contact us

If you have questions about the documentation requirements for a reduced withholding tax rate, the application for pre-approval or the permit to operate a NOM account in VPS, you may contact us by e-mail at [email protected].

 

Read more about refund of withholding tax on dividends