Nordic Control Found Systematic Use of Share Lending to Reduce Withholding Tax 

The Norwegian Tax Administration is currently wrapping up a joint Nordic audit of withholding tax on share dividends. The Nordic countries have investigated the use of share lending to reduce withholding tax on dividends. This practice is also known as share parking. The results of this audit have enabled the identification of actors that the Norwegian Tax Administration will now examine more closely.  

Large Actors Exploit Tax Rules 

The audit found both Norwegian and international actors who do not report correctly or who improperly exploits tax rules to make more money. We share these findings to highlight the need for better compliance and improved internal control among these actors.  

Withholding tax is a tax on dividends from shares that foreign owners must pay to the country where the company is based. Share parking is the practice of temporarily lending shares to other owners to reduce or avoid this tax.  

The Societal Importance of the Withholding Tax  

Withholding tax on share dividends from Norwegian companies is an important source of income for Norway, about NOK 13.4 billion in 2024. The audit so far supports our previous analyses, which show that Norway loses NOK 1–2 billion annually due to tax-motivated share lending.  

Large professional actors with stakes and interests in several countries are involved in this. It is primarily shares in the largest listed companies that are lent out. The goal of the joint Nordic audit was to examine the Nordic market and ensure that shareholders pay the right amount of tax to the right country, limit lending to what is commercially justified, and refrain from tax-motivated share lending.  

– We usually go five years back in time when we conduct audits like these. In addition to paying ordinary tax on the entire dividend, those who engage in share parking also risk interest and loss of the commission they have paid to the lender. We take this kind of activity very seriously, and actors who agree to such arrangements run a significant risk, says Regine Hatleskog Vastvedt, director of the NTA’s Næring Tax Division.  

International Cooperation Delivers Results 

The Norwegian Tax Administration cooperates with neighboring countries to uncover and counteract tax-motivated share lending.  

 – International cooperation has resulted in information exchange, knowledge-sharing, and a very successful joint audit, concludes Vastvedt.