Selling the business' assets

If you sell the company's fixed assets at a profit, it's taxable income for the business. If you lose money on the sale, you may be entitled to a deduction.

Does this apply to me?

This applies to you if you're self-employed and have fixed assets in the company.

By fixed assets, we mean assets that the enterprise owns and uses in its business activity. These can be physical assets, such as cars, copy machines, or buildings. Fixed assets can also be licences, patents or the like.

Selling at a profit or loss

The business can choose to declare the entire sales price or parts of it as income in the year of sale. The part of the sales price that the business does not recognise as income during the year of sale must be depreciated in the balance or transferred to the profit and loss account.

When the business sells at a loss, you can claim a deduction for this, but you cannot claim the full deduction in the same year as the asset is sold. You enter the loss in a profit and loss account.

We have an amount limit that states when you can deduct immediately, when you can depreciate, and when you must enter income from a profit and loss account.

Amount limit
  • up to and including the 2023 income year: NOK 15,000
  • from and including the 2024 income year: NOK 30,000

If you sell an asset at a profit, you can distribute the income over several years. If you sell asset at a loss, you must distribute the deduction over several years.

The various assets are divided into groups (balance groups) that show how much you can depreciate the assets by.

About balance groups and depreciation rates

Depreciating assets in the balance groups

When you sell or withdraw fixed assets that are depreciated
in balance groups a, c, d, or j, the company can choose to recognise the sales price or the sales value in whole or in part in the year of sale. The depreciation of the balance should continue as before.  

The part of the sales price or sales value that the company does not
recognise in the year of sale must be written down on the balance of
the fixed asset.  

If the balance is negative at the end of the income year for balance groups
a, c, d, and j, the company must recognise as income at least as large a share as it could have depreciated the fixed asset by (corresponding to the group's depreciation rate). 

Negative balance in balance group b must be transferred to the profit and loss account.

Example: Balance group d – Passenger cars – 20 percent (collective balance)
Passenger cars have an opening balance in year 1 of 250,000
One of the passenger cars is sold in year 1 for  700,000
   
Negative balance in year 1     -  450,000
   
The sum is recognised as income in year 1
(20% of NOK 450,000)
 		 90,000
   
Negative balance as at 31 December – transferred to year 2  - 360,000

  

If the negative balance at the end of the year is under the amount limit, the entire amount must be recognised as income.

  • up to and including the income year 2023: NOK 15,000
  • from and including the income year 2024: NOK 30,000

 

Example: Sale or withdrawal at a loss
Balance group d – Passenger cars – 20 percent (collective balance)
Passenger cars have an opening balance in year 1 of 250,000
One of the passenger cars is sold in year 1 for 150,000
Basis for depreciation in year 1 100,000
Depreciation (20% of NOK 100,000) 20,000
Balance basis as at 31 December is transferred to year 2 80,000

The business is entitled to a deduction for the loss on the sale of the car, limited to a maximum of 20 percent.

Negative balance in balance group b must be transferred to the profit and loss account.

If the business gives away or withdraws a fixed asset, it will not be entitled to a deduction for a loss that is not real. In this case, the business must remove the remaining opening value from the balance.

When you sell or withdraw fixed assets that are depreciated in balance groups e to i, you must calculate the gain and loss of the sale or withdrawal. Each balance in these groups contains only one fixed asset, and the balance is settled in the sales year.

If the business has a gain from the sale or withdrawal of major fixed assets in balance groups e to i, this is taxable income. If the business sells or withdraws fixed assets at a loss, it can claim a deduction. If the business loses money on a withdrawal, it does not receive a deduction for the loss and cannot transfer it to a profit and loss account.

You can enter the entire gain as income in the year of sale, or you can choose to enter the income in the company’s profit and loss account, so that you spread the income from the sale over several years.

You cannot deduct the entire loss in the year of sale. The loss must be entered in a profit and loss account, and you will be entitled to a deduction of a maximum of 20 percent each year.

A loss means that the asset is sold at a lower sum than the tax-depreciated value at the beginning of the year.

The enterprise uses a profit and loss account to keep track of the distribution of income and deductions for the years ahead.

Both gains and losses must be recorded in a profit and loss account. Each sale should be recorded as a positive or negative amount, and the account has a balance that is the sum of all the amounts.

You can only have one profit and loss account in your business, except if you have several different types of business activity, for example, if you're an independent consultant and also engage in agriculture. 

If the balance in the profit and loss account is positive (positive balance), the enterprise must enter at least 20 percent of the amount as income. If the balance in the profit and loss account is negative (negative balance), the enterprise can claim a deduction for a maximum of 20 percent of the amount.

Because the amounts are calculated with percentages, both income and deductions will be the largest in the first year, before gradually decreasing in the years to come.

If the profit and loss account has a positive balance that is below the amount limit at the end of the year, the business must recognise the entire amount as income that year.

If the profit and loss account has a negative balance that is below the threshold amount at the end of the year, the business can choose whether it wants to deduct the entire amount or whether it wants to spread the deduction over several years.

If the balance is below the threshold amount, the business must enter the entire amount as income for that income year. When it comes to deductions, the business can choose to enter the entire amount for the income year in question or to spread the deduction over several years.

  • up to and including the income year 2023: NOK 15,000
  • from and including the income year 2024: NOK 30,000

Each year, the business can choose to recognise more income or deduct less than the 20 percent that is the normal rate.

Example of sale with a profit:

The business sells a building in balance group h. The value
of the building was NOK 700,000 (depreciated value) and
the building was sold for NOK 1,000,000. The business enters the gain of NOK 300,000 in a profit and loss account.

The gain to be recognised as income in the year of sale is NOK 60,000 (20 percent of NOK 300,000). For year 2, there is NOK 240,000 left in the account (NOK 300,000 – 60,000), and the enterprise recognises NOK 48,000 as income in year 2 (20 percent of NOK 240,000).

When the balance falls below the amount limit, the remaining amount must be recognised as income.

 

Example of sale at a loss:


The business sells a building in balance group h. The value of the building was NOK 1,000,000 (depreciated value) and the building was sold for NOK 700,000. The business enters the loss of NOK 300,000 in the profit and loss account.

The loss that can be deducted in the year of sale is a maximum of NOK 60,000 (20 percent of NOK 300,000). For year 2, there is NOK 240,000 left in the account (300,000 – 60,000), and the business can enter a maximum of NOK 48,000 as a deduction in year 2 (20 percent of NOK 240,000).

When the balance falls below the amount limit, the remaining amount can be deducted.

 

Assets that you cannot depreciate on a declining-balance basis
For assets that cannot be depreciated on a declining-balance basis, the company must calculate the gain or loss in the year of sale. Examples:

  • the entire deduction for an asset was entered in the same year as the asset was purchased
  • assets that are depreciated according to rules other than the balance rules
  • assets that cannot be depreciated

If the business has deducted the entire cost in the year the asset was purchased, the opening value is zero. The gain will be equal to the sale price, minus any costs associated with the sale.

If the asset has not been depreciated on a declining-balance basis, the business can choose to enter the gain in whole or in part in the year of sale. The residual gain or loss must be transferred to the profit and loss account in the year of sale. This applies to the following assets: 

  • assets that are depreciated according to rules other than the balance rules
  • assets that cannot be depreciated, except financial assets, including business value that cannot be recognised in balance group b)
  • physical assets that had an estimated useful life of less than three years when the business purchased them
  • physical assets that cost less than the threshold amount when the business bought them

The business cannot transfer gains or losses on:

  • financial assets, such as receivables, shares, and other securities
  • ownership interests in companies assessed as partnerships

If the business has a gain or loss on the sale of financial assets and shares in a business assessed as a partnership, it must enter the amount in the year of sale.

If you, as the owner, want to withdraw a fixed asset that the business has depreciated or deducted, you must pay tax on the withdrawal. As the owner, you must pay tax on the benefit as part of the income that comes from the business. You should use the same value as if you could have sold the asset for on the open market.

If you use a service privately, which is normally used or sold in the business, you must pay tax on the withdrawal. This can be, for example, carpentry service, dental service, or cleaning service. The value of the withdrawal must be the same as what you could have sold the service for on the open market.

The company must follow the normal rules for the recognition of deductions from the balance and the calculation of gains and losses also in connection with the sale and transfer of fixed assets to shareholders or related parties.

When the company sells assets to a shareholder or someone in the shareholder's family (related parties), they must generally sell at market price. The market price is the amount the company can expect to get on the open market. The sale price must be entered as income in the accounts.

When a lower price than the market price has been agreed, the difference becomes taxable withdrawal for the company. The difference is the market price minus the amount paid by the shareholder. The company must enter the withdrawal as income in the accounts.

If a company buys an asset in order to make it available for the shareholder's private use, it is considered a withdrawal on which the company must pay tax.

If the company has spent more money on the asset than the market price, the company must pay tax on the total cost it has incurred.

When a lower price than cost price has been agreed, the difference is a taxable withdrawal for the company. The difference is the total cost minus the amount paid by the shareholder. The company must enter the amount as income in the accounts.

Exception: This does not apply to upgrades specially adapted to the shareholder, when they are of no value to the company and in previous years have been taxed as withdrawals.

Losses due to market fluctuations shall not be included in the withdrawal benefit.

Exception: If the intention was to sell the asset on to a shareholder, losses due to market fluctuations should be included in the withdrawal benefit.