In Norway, most new companies are established as limited liability companies (aksjeselskaper; AS) where the shareholders’ liability for the company’s obligations is restricted to the capital they have contributed. Limited liability companies are recognised as independent legal and tax entities, meaning the company itself is taxed separately from its shareholders.

Norwegian law also provides for other types of companies that are separate legal entities but tax-transparent. Examples include general partnerships (ansvarlige selskaper) and partnerships with pro rata liability (selskaper med delt ansvar).

Additionally, Norway recognises hybrid company structures, such as silent partnerships (indre selskaper) and limited partnerships (kommandittselskaper), where the liability varies among the participants. In these cases, at least one owner has unlimited liability for the company’s obligations, while others enjoy limited liability. These entities are treated as tax-transparent entities.

Norwegian tax law does not allow for choosing between tax-transparent and tax-opaque entities, as this depends on the corporate body of the relevant entity.

In the consultancy and brokerage industry, it is common to structure businesses as silent partnerships with a limited liability company acting as the principal. To external parties, the business operates as an ordinary limited company. However, profits and losses are allocated between the principal and the silent partners according to the terms of a partnership agreement.

In the private equity sector, funds are typically structured as either limited liability companies or silent partnerships. Silent partnerships offer a distinct advantage for foreign investors, as they are exempt from withholding tax of up to 25% on dividend distributions.

Shipping companies used to be structured as limited partnerships, but the particular tax advantages of such a structure are now history.

The tax residency assessment is a broad assessment dependent on several factors. Firstly, all companies established under Norwegian corporate law are considered tax residents of Norway.

Companies that are not established in Norway under Norwegian corporate law may still be deemed tax-resident in Norway if the company’s actual management is exercised in Norway. This is assessed based on:

• where key decisions for the company are made;
• where board meetings and general meetings are held; and
• where the company’s day-to-day management is carried out.

If a company is considered tax-resident in more than one country, a tax treaty between Norway and the other country will determine residency. Such treaties often include “tiebreaker” rules, which resolve conflicts by considering:

• the location of the company’s “place of effective management” or management seat; and
• the location of the company’s head office and principal operations.

When evaluating actual management and residency, emphasis is placed on the substantive realities of the company’s operations, rather than formalities.

For tax-transparent entities such as general partnerships and limited partnerships, the partnership is checked, and the owners are taxed based on their separate residency. However, the shareholders may be partially tax liable in Norway – for business income in Norway – as a consequence of participation in a Norwegian partnership.

The Norwegian corporate tax rate is 22% (as of 1 January 2025). This rate applies uniformly to both companies that are independent tax entities and corporate shareholders of tax-transparent entities. Personal shareholders of tax-transparent entities are also subject to a personal bracket tax and liable to pay national insurance contributions.

The effective tax rate on dividend distributions from limited liability companies or tax-transparent entities is 37.84% (as of 1 January 2025).

The taxable profit of a limited liability company is calculated on the basis of the company’s accounting profit. Tax adjustments are then made to arrive at the final taxable profit, which is the basis for calculating corporate income tax.

Limited liability companies in Norway are taxed on an accrual principle, meaning that income and expenses are recognised and taxed in the year in which they are earned or incurred, regardless of when the payment is actually made.

For sole proprietorships and workers, income is taxed on a receipt basis.

Norway offers several tax incentives for technology investments, with SkatteFUNN (tax deduction for research and development in an innovative business sector) as the central instrument. The arrangement entitles companies to a 19% tax deduction for R&D project costs approved by the Research Council of Norway. The deduction applies to project costs of up to NOK25 million per year.

Option taxation for start-up companies provides special tax benefits when granting stock options to employees.

Private investors can also obtain a tax deduction for investments in technology companies, with a maximum deduction of NOK1 million per year, resulting in a tax reduction of up to NOK220,000.

Special incentives in Norway for selected industries and companies are as follows.

• Energy and environment:

1. CO₂ compensation arrangement – energy-intensive companies receive partial compensation for increased costs because of the EU emissions trading system (ETS); and
2. electricity tax reduction – reduced electricity tax for industrial companies and certain projects considered “environmentally friendly”.

• Start-up companies and SMEs:

1. option taxation for start-up companies – lenient tax rules for stock options to employees in small start-up companies; and
2. tax incentives for investments in start-up companies – individual investors receive a tax deduction of up to NOK1 million per year for investments in start-up companies.

• Shipping and maritime industry:

1. taxation of shipping companies – reduced tax for shipping companies that opt for tonnage taxation instead of ordinary corporate tax; and
2. foreign companies using a Norwegian management company are exempt from local income tax under certain conditions.

• Agriculture:

1. tax exemption for the transfer of agricultural property to the next generation, and low net wealth taxation of similar assets.

Losses can be carried forward indefinitely and deducted from net income in future years. Carry back may be available upon the termination of business activities.

Business and capital gains may, as a starting point, be offset against each other, provided that the income is taxable. Losses from personal (business) income can only be offset against other personal (business) income. Income from silent partnerships and limited partnerships may only be carried forward and offset against future income from the same partnership.

In Norway, interest deductions are limited by an interest limitation rule.

The main rule states that net interest expenses exceeding 25% of taxable profit before interest, tax and depreciation cannot be deducted. This applies to both consolidated (group) and unincorporated entities, but with different thresholds:

• for group companies, the restriction applies only if the net interest expense for the Norwegian part of the group exceeds NOK25 million; and
• for non-group companies, the limit is NOK5 million.

For group companies, the rule covers interest on loans from both related and unrelated lenders. However, an equity exemption applies: if the company can demonstrate that its equity ratio (or that of the Norwegian part of the group) is equal to or higher than the equity ratio of the international group, the interest deduction is granted in full, despite the limitations.

For non-group companies, the limitation applies only to interest on loans from related parties.

Each corporate entity is treated as a separate tax entity with individual tax filings and tax obligations. Net income within the group can however be offset against losses in other group companies through “group contributions” (konsernbidrag).

The requirements for group contributions are as follows:

• companies must belong to the same group (at least 90% ownership);
• both the contributor and recipient must be taxable in Norway, with limited exceptions under European Economic Area (EEA) law;
• contributions are deductible for the donor and taxable for the recipient; and
• the transfer must be genuine and approved by the general meeting.

Additionally, group companies can register jointly for VAT purposes, meaning that several group companies are considered as one entity for (most) VAT purposes and that no VAT applies to transactions between these group companies.

Gains from share sales are generally taxable, while losses are deductible. The gain is calculated as the sales price minus the taxable cost price plus transaction costs. Under the first-in first-out (FIFO) principle, the first shares acquired are sold first.

Norwegian corporations and partnerships are exempt from capital gains tax on the sale of shares or units under the exemption method, which also prevents the deduction of losses. This applies to shares and other shareholdings in Norwegian companies, as well as shareholding in companies domiciled in the EEA, provided they are genuinely established and conduct economic activity there. For companies outside the EEA, the exemption applies if they are not domiciled in a low-tax country and meet specific ownership and holding period requirements.

Norway does not impose withholding tax on capital gains.

Input transactions are subject to VAT. However, the sale of ongoing businesses (business transfers) is exempt from VAT.

Real estate transactions are subject to a stamp duty of 2.5% of the gross sales price. Additionally, adjustment obligations for VAT purposes may arise, potentially triggering a requirement to repay previously deducted input VAT.

The most significant tax item compared to other countries is the Norwegian resource rent tax, which is a special tax levied on income derived from natural resources, including oil production, electricity generation, and the fishing and seafood industries.

Most local closely held companies are limited companies with limited liability for shareholders, but some, particularly in the agriculture and consultancy sectors, operate as sole proprietorships.

Norwegian tax rules are based on the principle of reality over form. This means that taxation takes place based on realities and not formalities. An income shall be allocated to the subject that has earned the income and classified on the basis of the nature of the income and taxed thereafter (as capital gains/business profits, etc).

Furthermore, there are strict limitations on private individuals’ access to a company’s assets and properties outside the company’s ordinary activities. Violations of these rules can be sanctioned under criminal law.

In Norwegian tax law, there are no specific rules that directly prevent limited companies from accumulating profits. The exemption model is designed to facilitate the reinvestment of profits in new businesses without tax in addition to ordinary profit tax.

For shareholders that participate actively in the business, capital gains may be reclassified to salary income/personal income for tax purposes.

In Norway, individuals are taxed on dividends and capital gains from the sale of shares according to the shareholder model. The effective tax rate on share gains and dividends is 37.84%, less accumulated shielding of the shares.

The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a predetermined risk-free interest rate, based on the effective rate of interest on treasury bills (statskasseveksler) with three months maturity plus 0.5 percentage points, after tax. The allowance is calculated for each calendar year and is allocated solely to shareholders at the expiration of the relevant calendar year. The risk-free interest rate for 2024 was 3.9%.

The taxation of dividends and capital gains for individuals investing in publicly traded corporations follows the same principles as for private corporations. Note, however, that different documentation requirements apply to obtain withholding tax relief.

In Norway, a 25% withholding tax applies to dividends paid to foreign shareholders, though it may be reduced under tax treaties. EEA-domiciled companies are exempt if they are genuinely established and operate in the EEA, while non-EEA companies may qualify under specific ownership criteria. Interest and royalties paid to affiliates in low-tax jurisdictions outside the EEA are subject to a 15% withholding tax, while payments to non-low-tax jurisdictions are not taxed. Norwegian tax authorities have increased oversight of cross-border transactions involving these payments.

Norway has established tax treaties with over 90 countries to prevent double taxation and foster international investment. These agreements are largely based on the OECD Model Tax Convention and influence the taxation of investments in Norwegian companies, including shares and debt instruments.

In 2023, Norway Statistics reported that Sweden, the Netherlands, Brazil, the UK and the USA together accounted for 57% of total foreign direct investment in Norway.

Local tax authorities in Norway challenge treaty shopping, where entities in treaty countries are used by residents of non-treaty countries to reduce taxes. Norway addresses this through various measures, including the principal purpose test (PPT) in many modern tax treaties, which denies benefits if the arrangement’s primary purpose is tax advantage. Some treaties also include a limitation on benefits (LOB) clause, restricting benefits to entities with genuine economic activity in the treaty country, a common feature of US treaties.

Norway’s general anti-avoidance rules (GAAR) further allow authorities to challenge artificial structures created primarily for tax advantages.

Inbound investors operating through local corporations in Norway face transfer pricing challenges. Transactions between related parties must comply with the arm’s length principle, requiring prices and terms to reflect those agreed upon by independent parties in an open market. The tax authorities can adjust taxable income if transactions deviate from this standard.

Strict documentation requirements, specified in the Norwegian Tax Administration Act, enforce compliance:

• Section 8-11 requires contemporaneous documentation of transfer prices for related-party transactions, available for audits; and
• Section 8-12 imposes additional taxes and sanctions for incomplete or missing documentation, with significant financial consequences, including discretionary income adjustments.

Valuing intangible assets such as trade marks, patents and technology remains a complex issue, as Norwegian authorities, in line with OECD guidelines, scrutinise valuations across jurisdictions. Intra-group services must be supported by evidence of necessity, actual delivery and market-based pricing. Similarly, loans between group companies must reflect market interest rates, with adjustments applied for deviations, particularly in cases of thin capitalisation. Notably, transfer pricing rules do not apply to equity transactions.

Local tax authorities in Norway frequently challenge limited risk-sharing arrangements with related parties due to their potential to shift profits to low-tax jurisdictions. Authorities assess whether these arrangements reflect genuine economic substance by evaluating risk allocation, functional contributions and compliance with the arm’s length principle.

Transactions must align with market terms and be properly documented. If the local entity assumes greater risks or functions than agreed, adjustments may be made for tax purposes. Contributions to intangibles or market value may also increase local profit allocation. Authorities can disregard profit-shifting arrangements or adjust profit margins to industry benchmarks.

Norwegian transfer pricing rules align closely with OECD guidelines.

However, Norwegian tax authorities impose strict documentation requirements, often demanding more detailed records than some other OECD countries. Inadequate documentation can result in fees, discretionary adjustments or additional taxes.

The general anti-avoidance rule allows the tax authorities to reclassify transactions designed primarily for tax benefits, reflecting Norway’s stringent application of OECD base erosion and profit shifting (BEPS) measures. Additionally, Norwegian authorities closely scrutinise the allocation of profits from intangible assets, ensuring they align with the enterprise’s substance and risk distribution.

While the Ministry of Finance is permitted to issue rules that deviate from OECD guidelines, this provision is rarely exercised, as noted in preparatory statements (Ot prp nr 62, 2006–07).

The introduction of country-by-country reporting has given the tax authorities access to more detailed information on the activities of multinational enterprises. In recent years, the Norwegian tax authorities have increased their focus on transfer pricing, especially after the Office of the Auditor General’s report revealed a lack of control in this area.

There are no official statistics on the incidence of mutual agreement procedures (MAP) in Norway. With an increased focus on transfer pricing and more controls, it is likely that the number of MAP cases will increase. However, it is important to note that the MAP process can be time-consuming, and taxpayers should therefore consider alternative dispute resolution mechanisms where appropriate. The Swedish Supreme Court recently ruled on a case and ordered the local tax authorities to allow a Swedish group company to make an appropriate adjustment as a result of increased taxable income abroad. As ordinary court proceedings are usually shorter than MAP proceedings, this may lead to a reduction in the use of MAP in the future.

In Norway, compensating adjustments are permitted to align related-party transactions with the arm’s length principle.

Such adjustments may involve both tax and customs authorities. If an adjustment affects the customs value of imported goods, it must be post-declared. Similarly, changes impacting taxable income must be reflected in the company’s tax return, ensuring compliance with independent pricing standards.

Adequate transfer pricing documentation is crucial to justify these adjustments. Missing or insufficient documentation can lead to additional taxes and other penalties.

In cross-border disputes, MAP can resolve disagreements between tax authorities, preventing double taxation and ensuring consistent application of the arm’s length principle.

Local branches (Norwegian branches of a foreign company; NUF) and subsidiaries of foreign companies are taxed differently in Norway.

Branches (NUF)

A branch is not a separate legal entity, but an extension of the parent company. It is only liable to tax in Norway on income earned in Norway. Branches are subject to ordinary corporate tax of 22%. As the branch is considered a part of the international headquarters, distributions are generally not subject to withholding taxes.

Subsidiaries

A subsidiary is a separate legal entity registered in Norway and is liable to tax on its global income. Subsidiaries also pay 22% corporate tax. Dividends to foreign owners may be subject to withholding tax, at a standard rate of 25%, but this can be reduced through tax treaties.

In Norway, capital gains on the sale of shares are generally taxable. For individuals or companies without tax residence in Norway, specific rules apply. Non-residents are generally not liable to pay tax in Norway on gains from the sale of shares in Norwegian companies unless the shares are linked to a permanent establishment in Norway.

Similarly, gains from the sale of shares in a foreign holding company that directly owns shares in Norwegian companies are also not taxable in Norway for non-residents, unless the foreign company itself has a permanent establishment in Norway.

Norway has entered tax treaties with many countries to prevent double taxation. These agreements often allocate the right to tax capital gains from the sale of shares to the state of the seller’s residence, except for gains related to real estate or permanent establishments. As a result, the provisions of a tax treaty between Norway and the investor’s country of residence may eliminate or reduce Norwegian tax liability in such cases.

Changes in control in Norway can trigger tax or duty charges, depending on the type of transaction and ownership structure. Section 9-3 of the Norwegian Tax Act imposes tax on gains from the sale of shares in Norwegian companies, while withholding tax on dividends may apply.

For indirect holdings higher up in an overseas group, taxation may apply if the shares are connected to real estate or a permanent establishment in Norway. Additionally, the tax authorities may disregard artificial arrangements designed to avoid taxation during such transactions.

Tax treaties between Norway and other countries influence the taxation in these scenarios by determining which jurisdiction is entitled to tax capital gains, particularly when they involve real estate or business establishments.

A change in control can trigger tax liability, especially when selling shares in a Norwegian company. Gains on the sale of shares in a foreign holding company that owns shares in Norwegian companies may trigger taxation in Norway if the shares are linked to a permanent establishment or real property in Norway.

When selling indirect ownership interests in a foreign group, even when the ownership is higher up in the group, tax liability may still arise if the shares are linked to real property or a permanent establishment in Norway. Tax treaties between Norway and other countries may affect the taxation of such sales and may in some cases reduce or eliminate the tax liability. It is therefore important to consider the specific provisions of relevant tax treaties.

In cases where the transaction is considered artificial to avoid tax, the general anti-avoidance rule can be invoked to nullify the transaction and impose taxation, even in cases involving the transfer of indirect ownership interests.

In Norway, payments from local companies for management and administration costs incurred by a foreign company in the same group may be deductible, provided that the cost is under arms length’s terms.

In addition, documentation demonstrating that the payments are necessary to generate taxable income is required. Tax treaties can also affect the right to deduct, especially in international transactions.

This means that payments to be deductible must follow the arm’s length principle and be documented as necessary for income service.

In the Norwegian context, specific limitations are imposed on loans between related parties, particularly with regard to interest deductions. Interest expenses on loans from related parties may be deductible, contingent upon the fulfilment of certain criteria.

In 2019, novel interest limitation rules were introduced, affecting both intra-group and external loans. In instances where net interest expenses in the Norwegian part of the group exceed NOK25 million in total, the deduction for interest expenses is limited to 25% of the company’s taxable EBITDA. To safeguard ordinary loans, a balance sheet-based exemption rule has been implemented. This rule stipulates that interest deduction is not applicable if either the company’s equity or the equity in the Norwegian part of the group is greater than or approximately equal to the group’s equity.

Additionally, loans from a company to a personal shareholder will in most cases be regarded as a taxable dividend. However, according to the Companies Act and the Accounting Act, this is considered a loan.

In Norway, foreign income earned by local companies is generally subject to corporate taxation under Section 2-2 of the Norwegian Tax Act. However, certain types of foreign income, such as dividends and gains from the sale of shares in EEA-domiciled subsidiaries, may qualify for tax exemption under the exemption method in Section 2-38, provided the subsidiaries are genuine enterprises meeting specific criteria.

When tax is paid abroad, Norwegian companies can claim a credit deduction under Section 6-40, limited to the Norwegian corporate tax rate of 22%. To prevent tax avoidance, the general anti-avoidance rule enables the tax authorities to deny benefits from artificial structures designed to avoid Norwegian taxation.

Tax treaties also play a critical role, reducing or eliminating withholding tax on dividends, as governed by Section 10-13. For companies controlling foreign entities in low-tax jurisdictions, Section 10-60 introduces controlled foreign corporation (CFC) rules to ensure such income is taxed in Norway (for a further explanation, see 6.5 Taxation of Income of Non-Local Subsidiaries Under Controlled Foreign Corporation-Type Rules).

When foreign income is exempt from taxation in Norway, for example through the exemption method, certain local costs related to this income may be treated as non-deductible. This primarily applies to costs that are directly related to the exempt foreign income.

Section 6-1 of the Norwegian Tax Act states that costs must be necessary for taxable income to be deductible. If the costs can be linked to exempt foreign income, they will in principle not be deductible. General operating expenses that are not directly related to exempt income may still be deductible.

Dividends from foreign subsidiaries are taxed in Norway according to different rules, depending on whether they are covered by the exemption method or whether they are subject to withholding tax.

Pursuant to the participation exemption, dividends from foreign subsidiaries may be exempt from taxation in Norway through the exemption method, provided that the Norwegian company owns at least 10% of the shares in the foreign company and that the foreign company is a real enterprise with economic activity. This means that dividends received from such subsidiaries are not taxed in Norway.

If the dividend is not covered by the exemption method, it may be subject to withholding tax in the country where the subsidiary is domiciled. The withholding tax may vary, and tax treaties between Norway and the country in question may reduce or eliminate the withholding tax on dividend.

In addition, Section 6-40 of the Norwegian Tax Act allows the company to claim a credit deduction for the foreign withholding tax paid, which can help to avoid double taxation. This deduction may not exceed the Norwegian corporate tax rate, which is 22%.

When intangible assets developed by Norwegian companies are transferred to foreign subsidiaries, this may trigger taxation in Norway depending on whether a gain arises from the transfer. Such taxation also occurs if the Norwegian company emigrates for tax purposes (exit taxation).

Capital gains taxation is based on the gain realised on the transfer – ie, the difference between the tax book value and the market value of the asset.

The transfer must also follow the arm’s length principle, which requires that the transaction takes place at market prices – ie, prices that would have been agreed between independent parties. It is also necessary to have documentation showing that the terms of the transfer comply with this principle.

Tax treaties can have an impact, especially when intangible assets are transferred to foreign subsidiaries. Such agreements can reduce or eliminate tax on gains, depending on the provisions agreed between Norway and the country in question.

Norwegian companies may be subject to tax on the income of their foreign subsidiaries under CFC rules, as outlined in Section 10-60 of the Norwegian Tax Act. These rules aim to prevent tax avoidance by taxing the income of subsidiaries located in low-tax jurisdictions, regardless of whether the income is distributed as dividends.

CFC rules are triggered when Norwegian companies control foreign entities operating in jurisdictions with significantly lower tax rates. In such cases, the foreign subsidiary’s income is taxed in Norway to ensure it cannot be used to shift profits and avoid taxation.

However, these rules do not apply to foreign branches of Norwegian companies, which are taxed under the general provisions for foreign income.

Taxpayers can claim a credit deduction for taxes paid abroad to prevent double taxation, provided they meet the documentation and calculation requirements specified in Section 16-20 of the Norwegian Tax Act.

Norwegian tax regulations include provisions that address the substantive requirements for foreign subsidiaries. These provisions are designed to prevent companies from establishing an apparent presence in low-tax countries with no real economic activity, known as “tax havens”. A company is considered resident in Norway if it is incorporated under Norwegian company law, or if it is incorporated abroad and has its real management in Norway.

Consequently, a foreign company can be regarded as a Norwegian taxpayer if it has its real management in Norway, regardless of its formal registration location. Companies domiciled in Norway are generally liable for tax payments in Norway. This implies that a foreign company that is considered a Norwegian taxpayer due to its effective management being in Norway will be subject to Norwegian taxation on its global income.

When a Norwegian (local) company sells shares in a foreign subsidiary, the gain from the sale may in principle be exempt from taxation in Norway pursuant to the participation exemption if the non-local affiliate is genuinely established and performs real activities within the EEA, or, if it is resident outside the EEA, is not resident of a low state jurisdiction and the Norwegian company owns at least 10% of the shares and the votes in the foreign subsidiary, and has done so for a minimum of two years prior to the sale.

If the exemption method does not apply, any capital gains on the sale is taxed at a rate of (currently) 22%.

Norway has implemented several measures to prevent tax avoidance and ensure compliance with tax regulations.

• Section 13-2 of the Norwegian Tax Act authorises tax authorities to disregard transactions that are artificial or primarily designed to achieve tax benefits. This ensures that transactions align with the intended purpose of the law and are based on genuine economic substance.
• Section 8-11 of the Tax Administration Act mandates thorough documentation for related-party transactions. Insufficient or missing documentation may lead to taxable income adjustments and penalties, emphasising the importance of transparency in intra-group dealings.
• Section 10-60 of the Norwegian Tax Act establishes CFC rules (for details, see 6.5 Taxation of Income of Non-Local Subsidiaries Under Controlled Foreign Corporation-Type Rules).

Norway also participates in the OECD’s BEPS initiative and incorporates measures like the PPT and LOB in tax treaties to combat tax evasion on a global scale.

The Norwegian Tax Administration has a system for routine tax audits, but there is no specific statutory interval for such audits. The Norwegian Tax Administration carries out audits based on risk assessments and has procedures and guidelines for this purpose (Tax Administration Act, Ot prp nr 70 (2008–09)). According to the preparatory work for the Tax Administration Act (Ot prp nr 70 (2008–09)), auditing and control must be carried out efficiently and purposefully, adapted to the individual taxpayer’s circumstances.

Section 9-1 of the Tax Administration Act gives the tax authorities the right to audit taxpayers’ accounts to ensure the accurate calculation and payment of tax and duties. Routine checks are allowed, but audits are mostly based on risk assessment, with higher-risk companies getting priority. Section 8-3 of the Tax Administration Act allows the tax authorities to conduct on-site audits. The Norwegian Tax Administration can visit a company to inspect its documentation, transactions and accounts, and verify its adherence to tax regulations. On-site audits are more frequent for high-risk companies.

The Norwegian Tax Administration employs risk assessment methodologies to identify entities or individuals deemed to be at elevated risk of misreporting or tax evasion. Consequently, certain entities are subjected to regular audits, while others are assessed as lower risk and consequently audited less frequently.

To address tax evasion and avoidance, Norway has adopted several of the changes recommended in the OECD’s BEPS project, including:

• the general anti-avoidance rule, which prevents the abuse of tax treaties by allowing tax authorities to intervene in transactions primarily designed to obtain tax benefits without genuine economic activity (BEPS measure 6).
• the CFC tax rules (for Norwegian-controlled foreign companies; NOKUS taxation), leading to Norwegian income tax on the income of foreign companies domiciled in low-tax countries controlled by Norwegian companies or individuals, regardless of distribution (BEPS measure 4);
• implementation of the PPT in a number of tax treaties through the multilateral instrument (MLI), to prevent the abuse of tax treaties in tax planning (BEPS measure 6);
• the introduction of country-by-country reporting to impose upon multinational companies an obligation to report their income in each country of operation, to better assess profit shifting to low-tax countries (BEPS measure 13);
• the introduction of increased documentation requirements for transactions between related parties to avoid artificial pricing for tax avoidance (BEPS measure 13);
• the implementation of the new transfer pricing guidelines and withholding tax on royalties, to prevent profit shifting via the transfer of intangible assets to low-tax countries to avoid taxation (BEPS measure 5); and
• rules to limit deductions for interest, to prevent excessive debt financing being used to reduce tax (BEPS measure 4).

Norway follows the OECD’s BEPS guidelines to combat tax evasion and ensure a fair and efficient tax system that prevents multinational companies from exploiting legal loopholes.

As an active participant in the BEPS 2.0 initiative, Norway supports both Pillar One, which reallocates taxing rights to reflect where companies generate value, particularly in the digital economy, and Pillar Two, which establishes a 15% global minimum tax to curb tax competition and secure fair revenue for all nations. Pillar Two is already in force in Norway.

Pillar One will require changes to national legislation and tax treaties. These measures will impact multinational companies operating across jurisdictions, ensuring they contribute fairly to the tax base.

To align with these reforms, updates to the Tax Administration Act and the Norwegian Tax Act will be necessary, reinforcing Norway’s commitment to maintaining a sustainable and equitable taxation system.

In Norway, international tax has sparked public interest, especially after scrutiny of tax evasion and profit shifting.

The government is taking a proactive stance on OECD’s BEPS measures, aiming for fair taxation. This commitment is seen in laws like the cut-through rule and CFC taxation. The Norwegian tax administration has adapted its practices to prevent tax avoidance and ensure that multinational companies pay tax in Norway. This adaptation is evident in the preparatory work for the Tax Administration Act (Ot prp nr 70 (2008–09), where international co-operation is emphasised as a key instrument for combatting tax evasion.

Norway’s position is to have its tax policy aligned with international standards. The nation strives to strike a balance between international obligations and a competitive tax environment.

Norway has adopted a tax policy to attract investment and combat tax evasion.

Norway has maintained a 22% corporate tax rate and uses tax incentives, like R&D deductions, to encourage competitiveness. The corporate tax rate is subject to ongoing political discussions, and it is anticipated that the tax rate may be increased in the upcoming years.

Norway’s tax structure includes a special tax (a rent tax) on income from natural resources, including petroleum extraction, power generation and the fishing and seafood industries. Also, Norway imposes a net wealth tax on individuals resident in Norway, which is considered to be non-competitive and discriminatory against local residents.

One of the most vulnerable aspects of the Norwegian tax system is its tax incentives, which are subject to EU state aid scrutiny under the EEA agreement. Incentives like R&D tax deductions and schemes offering advantages to specific industries risk being classified as illegal state aid if they distort competition. This has been a particular concern in Norway, where international companies benefit from such measures. To address potential issues, Norway has carefully modified its tax incentives to comply with EEA regulations and avoid challenges from the European Commission.

In addition to state aid rules, the international tax framework significantly influences Norway’s system. International trends and rules (such as the interest deduction limitation rule and country-by-country reporting) ensure that Norway’s tax system aligns with global standards while maintaining fairness and transparency.

Norway has already implemented several BEPS measures to address hybrid instruments.

The interest deduction limitation rule limits the possibilities for multinational groups to shift their income to countries with lower tax rates through artificial financing arrangements in Norway.

The participation exemption does not apply to dividends from foreign subsidiaries if such subsidiary may deduct the dividend payment in its jurisdiction.

Section 8-11 of the Tax Administration Act imposes further documentation requirements for transactions with related parties, including those involving hybrid instruments, with the aim of preventing abuse and ensuring tax compliance. These measures align with BEPS recommendations, and further adjustments may be necessary to comply with future guidelines.

Norway does not have a territorial tax system, instead using a global tax system where Norwegian companies are liable for tax on all income, both domestic and foreign. 

Interest deduction limitations have been introduced to prevent profit shifting via artificial interest payments, in line with BEPS measure 4.

Stricter interest deduction limitations may affect multinational companies that use group financing arrangements, but are unlikely to have much effect on investors operating within existing structures in Norway.

Norway has a global tax system that addresses CFCs through Section 10-60 of the Norwegian Tax Act.

These regulations tax the income of Norwegian owners of foreign companies in low-tax countries, regardless of distribution. This approach aligns with the BEPS CFC proposals, which aim to prevent profit shifting. Norway aligns with the CFC proposals’ overarching principles, but practical challenges may emerge in distinguishing between companies with genuine economic activity and those using artificial tax planning structures. This can impede the effective implementation of the CFC rules.

LOB and anti-avoidance rules in double tax treaties (DTC) can have a significant impact on both inbound and outbound investments in Norway. LOB clauses prevent abuse of tax treaties, for example by treaty shopping, and require companies to have real economic activity to enjoy tax benefits.

Norway also has GAAR, granting the tax authorities the right to deny tax benefits if transactions are artificially structured for tax avoidance. These rules apply to both foreign investors seeking tax benefits in Norway and Norwegian investors using tax treaties in other countries.

BEPS measures have caused big changes to how transfer pricing is done in Norway. More strict rules on documents and reports, especially those derived from BEPS measure 13’s country-by-country reporting, led to Section 8-11 of the Tax Administration Act. This section requires companies to document transfer pricing structures to ensure adherence to the arm’s length principle.

These changes enhance the tax authorities’ capacity to verify that transfer prices accurately reflect real economic activity.

The taxation of profits from intangible assets (IP) has been controversial, and BEPS has introduced measures to ensure that profits from intangible assets are taxed where they are created. Norway has implemented BEPS measures that prevent profits from intangible assets being transferred to low-tax countries through transfer pricing.

Norway supports country-by-country reporting and has implemented the requirements of BEPS measure 13 under Section 8-11 of the Tax Administration Act, imposing on multinational corporations a duty to disclose their financial earnings, taxes paid and economic activities on a country-by-country basis.

It is challenging to adapt the tax system to the global digital economy. Norway is committed to ensuring that digital platforms contribute tax revenues in accordance with their economic activities. The nation’s future tax policies are to be aligned with globally recognised tax regulations for the digital economy, which may include digital services tax (DTS) schemes.

Norway has introduced new reporting obligations for foreign companies, leading to, for instance, the obligation for companies (such as AirBnB) to report all transactions in Norway to the tax authorities.

Norway has also introduced withholding taxes on royalties paid from Norwegian entities to related non-Norwegian entities resident in low-tax jurisdictions.

In addition, the tax authorities are closely monitoring the tax and VAT obligations of foreign entities with sales in Norway.

Norway endorses international initiatives on the taxation of the digital economy, including the OECD’s BEPS measure 1.

It supports a DST to ensure that digital platforms contribute tax in countries where they generate revenue, regardless of a physical presence. The taxation of companies without a physical presence is regulated by Section 2-2 of the Norwegian Tax Act and Section 8-11 of the Tax Administration Act, which are relevant to digital companies. Norway has demonstrated its commitment to global solutions by supporting OECD initiatives and aligning with the EU’s digital taxation initiatives.

Norway does not have a set of regulations for taxing offshore intangible assets, but the usual tax regulations apply to assets used in Norwegian territory.

Income derived from business activities in – or managed from – Norway is taxed in Norway, and withholding tax on royalties, interests and dividends may be imposed. The general anti-avoidance and transfer pricing rules prevent circumvention of the existing rules, and both the general anti-avoidance rule and LOB/PPT rules in the tax treaties prevent the abuse of the treaties, especially by IP owners in tax havens.