Buying assets for the business
The business may be entitled to a deduction when it buys fixed assets that lose value as they are used or age. The costs of purchasing fixed assets can be spread over several years (depreciated).
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.
The type of fixed asset and the cost of purchase determine what you can claim
The business is only entitled to a deduction for fixed assets that lose value as they are used or age (reduction in value).
The business cannot claim a deduction for fixed assets that retain their value such as lots, roads, residential properties, and art.
The type of fixed asset and what the cost was when you bought it determines when and how you can claim a deduction.
We have an amount limit that states when you can deduct in the year of purchase and when you can depreciate.
Amount limit
- up to and including the 2023 income year: NOK 15,000
- from and including the 2024 income year: NOK 30,000
Deductions you can claim in the year of purchase (year of acquisition)
You can claim a deduction in the year of purchase if the fixed asset:
- costs up to the amount limit
or - has an expected lifetime of less than three years
Fixed assets that are manufactured by the business itself are considered acquired when they are completed.
Fixed assets purchased by the business are considered acquired when they have been delivered.
The business can only claim a deduction when the fixed asset has been completed or delivered.
This also applies to acquired goodwill, such as the value of brand names or expertise.
You can choose to distribute the deduction for the cost over the useful life you think the fixed asset will have when it:
- costs more than the amount limit
- has a useful life of less than 3 years
If the business purchases time-limited rights that are only valid in the year of purchase, you can enter the deduction immediately. The right must have been purchased for use in the business, lose value, and be neither significant nor long-term.
Deductions you must spread over several years
The main rule is that you must spread the deduction for the cost over several years if all the following conditions are met:
- the fixed asset costs more than the amount limit
- the fixed asset’s expected lifetime is more than three years
- the fixed asset loses value due to use or age
You must capitalise the cost of the fixed asset in the accounts in the year of purchase. When you depreciate, you distribute the cost of the fixed asset over several years in the accounts. You get the deduction as you use the fixed asset and it loses value.
You depreciate the fixed asset at a fixed percentage rate each year, until the residual value of the fixed asset is below the amount limit.
The different types of fixed assets are divided into different balance groups with different depreciation rates.
- Fixed assets included in groups a, b, c, and d are depreciated as a whole for each group (collective balance for each group).
- Fixed, technical installations that are part of group j are depreciated on a collective balance for each building.
- Fixed assets that are included in groups e, f, g, h, and i are entered in a separate balance for each fixed asset.
Example of declining-balance depreciations
The business bought a PC with a screen in 2023, that is, balance group A, for NOK 50,000. It can be depreciated by up to 30 percent of the residual value each year. The depreciation will be:
Year 1: NOK 50,000 x 30% = NOK 15,000 to be deducted
Residual balance: NOK 35,000Year 2: NOK 35,000 x 30% = NOK 10,500 to be deducted
Residual balance: NOK 24,500Year 3: NOK 24,500 x 30% = NOK 7,350 to be deducted
Residual balance: NOK 17,150
The remaining balance will never go to zero, but when the balance is below the amount limit, the remaining value can be deducted.
When you buy a fixed-term right that is valid beyond the year you buy it, you must enter it in the accounts in the year of purchase and capitalise it. This also applies if the cost of the right is below the threshold amount or its validity is less than three years.
When you use a right with a formal, limited lifespan, you can depreciate the purchase value by equal annual amounts, spread over the duration of the right.
If the reduction in value of the right is clearly faster, you can claim a higher annual deduction.
In principle, fixed assets of unlimited duration cannot be depreciated. If the value of a right is reduced by a lot, the company may still be entitled to a deduction. In such cases, the company must substantiate that there is an obvious, permanent decline in value.
Different ways to depreciate
Sole proprietorships are often only subject to the bookkeeping obligation and deduct by means of declining-balance depreciation. If the business is subject to the accounting obligation, the same rules apply as for private limited companies.
Private limited companies are subject to the accounting obligation and use straight-line depreciation in their accounts.
You depreciate the fixed asset at a fixed percentage rate each year, until the residual value of the fixed asset is below the amount limit.
The different types of fixed assets are divided into different balance groups with different depreciation rates.
- Fixed assets included in groups a, b, c, and d are depreciated as a whole for each group (collective balance for each group).
- Fixed, technical installations that are part of group j are depreciated on a collective balance for each building.
- Fixed assets that are included in groups e, f, g, h, and i are entered in a separate balance for each fixed asset.
Example of declining-balance depreciations
The business bought a PC with a screen in 2023, that is, balance group A, for NOK 50,000. It can be depreciated by up to 30 percent of the residual value each year. The depreciation will be:
Year 1: NOK 50,000 x 30% = NOK 15,000 to be deducted
Residual balance: NOK 35,000Year 2: NOK 35,000 x 30% = NOK 10,500 to be deducted
Residual balance: NOK 24,500Year 3: NOK 24,500 x 30% = NOK 7,350 to be deducted
Residual balance: NOK 17,150
The remaining balance will never go to zero, but when the balance is below the amount limit, the remaining value can be deducted.
How to do it in your tax return
This video shows you how to register tax depreciation of fixed assets in the business specification:
Those who are subject to the accounting obligation must convert from straight-line depreciation to declining-balance depreciation when they submit the tax return. This means that the company or business has a temporary difference between the accounting deduction and the tax deduction that is evened out over time.
Temporary difference between accounting and tax
The Accounting Act and the Taxation Act use different ways of depreciation (straight-line depreciation and declining-balance depreciation). You must adjust for these differences when calculating the tax basis for the business.
The business bought a PC with a screen in 2023, that is, balance group A, for NOK 50,000. It can be depreciated by up to 30 percent of the residual value each year. The depreciation will be:
Year 1: NOK 50,000 x 30% = NOK 15,000 to be deducted
Residual balance: NOK 35,000Year 2: NOK 35,000 x 30% = NOK 10,500 to be deducted
Residual balance: NOK 24,500Year 3: NOK 24,500 x 30% = NOK 7,350 to be deducted
Residual balance: NOK 17,150
Company AS must follow the accounting rules for depreciation. The company bought a PC with a screen for NOK 50,000 in 2023. The company considers that a reasonable depreciation schedule is to depreciate it over three years, with equal amounts each year.
Year 1: NOK 50,000/3 = NOK 16,667. For November–December = NOK 16,667/12 x 2 = NOK 2,777
Year 2: NOK 50,000/3 = NOK 16,667.
Year 3: NOK 50,000/3 = NOK 16,667.
Year 4: NOK 50,000/3 = NOK 16,667. For January–October = NOK 16,667/12 x 10 = NOK 13,889The purchase cost has been fully depreciated in year 4.
| Year | Declining-balance depreciation | Straight-line depreciation | Temporary differences |
| Year 1 | 15,000 | 2,777 | 12,223 |
| Year 2 | 10,500 | 16,667 | - 6,167 |
| Year 3 | 7,350 | 16,667 | - 9,317 |
| Year 4 | 5,145 | 13,889 | - 8,744 |
| Year 5 | 12,005 | 0 | 12,005 |
| Sum | 50,000 | 50,000 | 0 |
Specific information regarding
Assets that were purchased for private use and/or have been used privately can later be used as fixed assets in the business.
The opening value that the business must use is the sales value at the time when the asset is put into use in the business. The opening value cannot be set higher than what the owner previously bought/acquired the asset for.
When a company buys assets from a shareholder or the shareholder's related parties, the company should use the market value as a basis. The market value is the price at which the asset can normally be sold.
The company must be able to prove what the market value was at the time they bought the asset. The proof can be, for example, an appraisal from a real estate agent or a dealer.
A related party is a spouse and persons with whom the shareholder is related to by blood or marriage in an ascending or descending line, or in the collateral line, as close as an uncle or aunt.