Good transfer pricing practices reduce business risks

When you carry out transactions with associated parties across national borders, transfer pricing risks arise. Good transfer pricing practices reduce the risk of:

• missing or incorrectly assessed price (not arm's length price)
• errors in the reporting of controlled transactions, and
• follow-up from the Tax Administration, including audits and discretionary assessments of income.

You have good transfer pricing practices when you:                                                          

• assess the risks on an ongoing basis, before, during and after the transactions
• have written agreements that stipulate conditions for the transactions between the parties
• can explain why a price is in accordance with the arm's length principle
• can support the explanation by providing a comparability analysis

The Tax Administration’s assessment of transfer pricing risks

We have a responsibility to assess whether taxable transactions in Norway are taxed correctly. This includes transactions that cross national borders. When transactions are carried out across national borders, it involves the risk that the income will not be taxed in any of the countries involved. There may also be a risk that income is moved from high-tax countries to low-tax countries, or that transactions that give rise to high deductions will be added to countries with a high tax rate.

We’ve made transfer pricing a prioritized area. The Transfer Pricing Section conducts risk assessments of companies that have transactions with associated enterprises across national borders and tax regimes.

The risk assessments are carried out using various methods, for example, through digital analysis platforms and by reviewing reported data. We receive large amounts of data, both from abroad and from Norwegian sources that we use in these risk assessments. In addition, we may request that the company provides transfer pricing documentation.

We conduct risk assessments at three different levels:

• group level
• company level
• transaction level

You can help make our risk assessments more effective and reduce the risk of audits by ensuring:

• that you implement and keep records of agreements as independent parties would have
• that the reporting corresponds to the actual circumstances
• that you meet the deadlines for submitting requested documents
• that what you report corresponds to the transfer pricing documentation

Check if you can get an advance ruling of transfer pricing questions

Advance rulings

We cannot give advance rulings on discretionary assessments or valuation in transfer pricing cases. Separate rules apply to the area of petroleum tax.

Transfer pricing guidance

The Tax Administration can provide guidance on a company's transfer pricing risks and in connection with risk mapping of pricing issues.

Advance ruling between Norway and other states – APA procedure

You can request to enter into an agreement on advance ruling of transfer pricing issues. The agreement applies to future transfer pricing. We refer to such an agreement as an "Advance Pricing Arrangement" (APA). The agreement is entered into between the Norwegian competent authority and the competent authority in the country where the transaction party is domiciled.

The Norwegian competent authority does not enter into unilateral agreements with companies.

Advance rulings on the company’s risks with more than one countries’ tax authorities (ICAP)

ICAP (International Compliance Assurance Programme) is the OECD's international initiative to improve predictability of international taxation. The Norwegian Tax Administration participates in the OECD's ICAP scheme. Through ICAP, large company groups have  the opportunity to start simultaneous dialogues with tax authorities in more than one of the countries where the group operates.

The process is a voluntary arrangement for the participating groups. The Tax Administration makes assessments based on several criteria to decide whether a group is relevant for an ICAP process. The outcome of an ICAP process is a clarification of the transfer pricing risks for the group.

More about ICAP and contact information (in Norwegian only).