Norway is a constitutional monarchy, with a parliamentary democratic system of government. Powers are allocated among the executive, the legislature Storting and the court system. Many executive powers are granted to the “King in Council.” The unicameral parliament has legislative authority; it passes legislative acts, imposes taxes and adopts the fiscal budget. For administrative purposes, the country is divided into 19 counties, which are subdivided into 428 municipalities.

Although not an EU member state, Norway generally is fully integrated in the EU’s internal market and free travel area, through the European Economic Area (EEA) and Schengen agreements. Norway is a member of the European Free Trade Association (EFTA), along with Iceland and Liechtenstein. The EFTA has an agreement with the EU (Agreement on the European Economic Area) that provides for zero tariffs on most goods and that effectively implies that Norway has adopted most of the EU articles and directives (but not tax directives). Norwegians are known to be very patriotic and proud of their country. They almost certainly think that Norway carries a bigger importance on the world arena than it actually does.

Norway is one of the richest countries in the world, and at the same time one of the smallest. The population is just about to reach 5 million people. Norway is very independent and likes to control its own affairs, which is why it is still reluctant to join the EU.Norway’s economy is, to a large extent, based on international trade. Rich in natural resources, including petroleum and natural gas, the country exports raw materials and partially processed goods to trading partners that include other European countries, Japan and the US. The country has become increasingly services-oriented.

• Population: 5.2 million
• Form of government: Unitary parliamentary constitutional monarchy
• Official & spoken languages: Norwegian (bokmål and Nynorsk), Sami, Kven, Tavringer, Romani
• Currency: Norwegian Krone (NOK)
• Time zone: CET (UTC +1) Summer CEST (UTC +2)
• GDP (PPP): $ 364.268 billion
• GDP (PPP)/per capita: $69.296
• Average salary: NOK 31.806 (4570€)
• Unemployment: 4.7%
• Major trading partners: Germany, The United Kingdom, The Netherlands, Sweden, France, China, South Korea

There are many good reasons for doing business in Norway, such as the high level of education, high productivity, and a longstanding culture of innovation. Norway has one of the world’s strongest economies. High priority is given to knowledge development, innovation, technology and maintaining a sustainable business sector.

Norway is a world leader in the oil and gas, energy, maritime and seafood sectors. Companies in other sectors are also making their mark. Medtech, FinTech, Edtech and other technology clusters are flourishing.

Norwegian technology clusters, and centres of expertise innovation can provide foreign companies with specialist knowledge, relevant networks and potential partners.

It is easy to set up a business in Norway. This was highlighted in the ‘Ease of doing business 2017’ survey, where Norway is ranked sixth. In other words, Norway a very interesting country both for established companies and for start-ups.

Ease of Doing Business ranking

New businesses registered in 2016: 25888

Starting and registering a private limited company (AS) in Norway

When you start a private limited company, you must choose a name, found the company and obtain share capital. The company must then be registered. If you are unsure whether a private limited company is the right form of incorporation for you, read about the other options under ‘choosing form of incorporation’.

Conditions for starting a private limited company:

• Private limited companies can be founded by one or more people. Both natural and legal persons (such as private limited companies) can be founders.
• You must be aged 18 or over in order to be a founder or perform another role in a private limited company.
• The company must have a Norwegian business address (i.e. a Norwegian physical address which is stated in the format: street/road, house number, postcode and postal town. Postbox addresses will not be accepted).

Found the company by completing the form ‘Foundation of a limited company’.

• Ask the bank to set up a share capital account. Deposit the share capital (minimum NOK 30,000) and ask for confirmation of receipt from the bank. The confirmation can also be given by an auditor, a lawyer or authorized accountant. If the share capital consists of other assets (non-cash contribution), the value of these assets must be confirmed by an auditor.
• Register the company. Confirmation that the share capital has been deposited must be enclosed.
• Send the notification for signing. The entire board of directors must electronically sign the notification, and the bank must electronically sign the confirmation to verify that the share capital has been paid in. If the company has chosen to have an auditor, the auditor must electronically sign the notification.
• You will be notified when the company has been registered
• Registering a private limited company costs NOK 5570 (one-off fee from the Register of Business Enterprises).
• Upon registration, the company will be assigned an organisation number.

Foreign Citizen

If you are not a citizen of an EU/EEA country, and are planning to run a business in Norway, you need to have a residence permit that will allow you to work here. You can find information about the terms and requirements for resident permit on the Norwegian Directorate of Immigration’s (UDI) website.

Running a private limited company

The general meeting is the supreme authority in a private limited company. The general meeting elects the board. The board must consist of at least one member. The board is responsible for administering and managing the company. In turn, the board can opt to appoint a general manager who will be responsible for the day-to-day operation.

Even small private limited companies must hold general meetings and have a board. In private limited companies with only one shareholder, it is not uncommon for the same person to hold all the abovementioned roles.

Shareholders

‘Shareholders’ is the term used to refer to those who own a private limited company. Private limited companies must have at least one shareholder. There are no restrictions on the number of people who can own shares in a private limited company. Shares can be owned by private individuals, legal persons and jointly between many shareholders. The general rule is that all shares give equal rights in the company, but exceptions from this rule may be stipulated in the articles of association.

Share capital

In a private limited company, the founders must pay in share capital. This amount must be at least NOK 30,000. Share capital can subsequently be altered through a capital increase or capital reduction. Share capital is an asset which can be in the form of cash or assets which can be sold and thereby converted to money. The share capital can also be a combination of money and assets. If the share capital consists of assets, this is called a non-cash contribution. The purpose of share capital is to provide collateral for the company’s creditors.

Representation of the company externally

Under the Companies Act, it is the collective board which represents the company externally. The general manager has the right to represent the company regarding matters which come under general management.

Groups

When a private limited company (parent company) has a controlling influence in another limited company (subsidiary), this constitutes a group. ‘Controlling influence’ means that the parent company has more than 50% of the votes in the other company.

The parent company in a group can opt not to have the annual accounts audited if the group overall fulfils the conditions for opting not to have an audit.

In addition to the company’s accounts, the parent company in a group must also prepare consolidated accounts. Consolidated accounts consist of the accounts of the parent company and the subsidiaries combined. The aim is to present the group as a single financial entity. Small enterprises are generally exempt from the obligation to prepare consolidated accounts.

Norwegian Holding companies

In some cases, it may be appropriate to establish a private limited company which will establish and own one or more other companies. The first company, which is called the ‘holding company’, is only established in order to own shares in other private limited companies and manage the yields. The other company or companies is a normal operating company and it is this company that is responsible for the commercial activity.

There are two particular reasons for establishing a holding company:

• It helps to spread the risk through carrying on different enterprises in different companies.
• The gains made on any future sales of enterprises and dividends will be virtually tax-free for the holding company.
• If a holding company reinvests all the revenues from the operating company, they will pay virtually nothing in tax (taxation of company shareholders). However, if a holding company opts to pay the surplus to their personal shareholders, this will be taxed at the rate of 23%.
• The advantage of having a holding company, versus owning the shares privately, therefore lies in the opportunity to defer full taxation.

Public limited companies (ASA) in Norway

Some private limited companies are converted to public limited companies. There are many similarities between the rules which apply to private limited companies and those which apply to public limited companies. However, some key differences are:

• Unlike a private limited company, shares in a public limited company can be sold to a unspecified group of people, to “the general public”. An example of the sale of shares to the public is the buying and selling of shares on a stock exchange.
• A precondition for flotation on a stock exchange is that the company is registered as a public limited company.
• Public limited companies normally have many more shareholders than private limited companies.
• Shares in public limited companies must be registered in the securities register.
• Public limited companies must have share capital amounting to at least NOK 1 million and a board comprising at least three members. The company is obliged to have a general manager.
• The articles of association must state that the company is a public limited company. In addition, the name of the company must contain the word ‘allmennaksjeselskap’ (private limited company) or the abbreviation ‘ASA’.
• The minimum requirements concerning the articles of association of public limited companies are more comprehensive than those for private limited companies. Conversion from a private limited company to a public limited company will therefore entail certain amendments to the articles of association. However, the organisation number will remain the same.

Accounting Requirements

Most people who run their own business must keep accounts. Accounts form the basis for most statutory statements which you have to submit to the public authorities. It is therefore important to have good routines right from the start. Up-to-date accounts are also one of your most important management tools.
If you run a small sole proprietorship, you might be exempt from accounting obligations under certain circumstances. This mainly concerns those with an annual income of less than NOK 50,000 who are not registered in the VAT Register. If this applies to you, you must still document all your income and expenses and retain this documentation in accordance with the applicable bookkeeping rules.

Keeping accounts

You can prepare your accounts yourself, but if you are not familiar with the relevant regulations, you should consider asking an accounting to do it for you. Alternatively, you could ask an accountant to help you during your start-up phase.

In Norway, the accounting regulations are split into two. Businesses are subject either to the bookkeeping obligation only, or the bookkeeping obligation and the accounting obligation.

Most sole proprietorships are subject to the bookkeeping obligation only. All private limited companies are also subject to the accounting obligation. In simple terms, this means that enterprises that are subject to the accounting obligation must submit annual accounts to the Register of Company Accounts, as well as a tax return and an income statement to the Norwegian Tax Administration.

If you decide to keep your own accounts, you must first choose an accounting system. Accounting systems must be systematic and clear. For example, they must be constructed in a way which enables you to extract reports for submission to the public authorities.

For a few hundred kroner a month, you can now get access to good online accounting software with a lot of built-in help and automated guidance. Many systems consist of separate modules, so you only have to pay for what you need. For example, if you don’t have any employees, you will not need the payroll functions. Search online and contact a few suppliers before you decide.

If your business have fewer than 600 vouchers a year, you are permitted to use a spreadsheet for your bookkeeping. However, using a manual spreadsheet will mean you will need a greater knowledge of how your bookkeeping must be carried out and it will be easier to make mistakes. The Norwegian Accounting Standards Board has prepared a standard for the use of text processing and accounting programs for bookkeeping purposes (NBS 6). It can be a good idea to familiarise yourself with this standard before you decide to keep your accounts in a spreadsheet.

VAT reporting

If you are registered for VAT, you must submit tax returns for VAT to the relevant authority every other month (per period).
When you have been VAT-registered for one year, you can apply to submit returns annually if your turnover is less than NOK 1 million. The due date for the application for annual VAT returns is 1 February.

Tax returns

All taxable businesses must submit a tax return. Sole proprietorships and partners in shared liability partnerships must submit form RF-1030 ‘Tax return for self-employed persons etc.’. Private limited companies, cooperatives and other non-personal taxpayers must submit form RF-1028 ‘Tax return for corporations’ (available in Norwegian only).

Do I need to have an auditor?
Whether or not you need an auditor will depend, among other things, on your form of incorporation and the size of the turnover. Sole proprietorships are normally only subject to the bookkeeping obligation and do not need to have an auditor. Private limited liability companies can choose not to have an auditor when the turnover is less than NOK 6 million. For other companies with an accounting obligation, it is generally mandatory to have an auditor when the turnover exceeds NOK 5 million.

Moving to Norway

• If you’re planning to live in Norway for six months or more, you must report your move to Norway no later than eight days after your arrival.
• If you’re registered as a resident in Norway, you’ll be assigned a Norwegian national identity number. If you already have an national identity number, you must use this number. You don’t have to tell us you’re moving here if you intend to stay in Norway for less than six months. You may then have a temporary ID number (D number).
• If you’re planning to live in Norway for six months or more, you must report your move to Norway no later than eight days after your arrival.
• If you’re in Norway to work, but still live in a country within the EEA, you may be a commuter. You must still tell us about your move to Norway, but we’ll consider whether you should be exempt from the requirement to be registered as resident in Norway. Read more about the rules for commuters

Where can I report my move to Norway?
To report a move to Norway, you must go to one of 42 selected tax offices in person in order to submit a relocation notification and undergo an ID control. This also applies to Norwegian citizens who are returning to Norway.

The Directorate of Immigration submits notifications of relocation for single minors and resettlement refugees.

You must bring the following when you report a move to Norway:

• Reporting a move to Norway. You must submit a notification of moving to Norway. You can download and print the form in advance
  Identification documents for ID controls.
• Everyone who moves to Norway must have to undergo an ID control in person. All family members must attend if you’re moving to Norway with your family. The identification documents that you have to present will depend on your citizenship and the basis for your residence in Norway. Read more about ID controls
• Proof of lawful residence in Norway. Nordic and Norwegian citizens don’t have to present such documentation. Citizens of other countries must present a registration certificate issued by the police, or a Schengen residence card that shows you’ve got a residence permit that’s valid for six months or more.
• Proof that you intend to live in Norway for at least six months. You must also bring documentation that verifies you’ll remain in Norway for six months or more. Examples include:
• A valid house purchase contract or a tenancy agreement that’s valid for at least six months. If your tenancy agreement is more than three months old, you must bring confirmation from the property owner that proves your tenancy agreement is still valid.
• If you intend to work in Norway, you must also bring an employment contract that’s valid for six months or more. If your contract is more than three months old, you must bring confirmation from your employer that shows the contract is still valid.
• In the case of work assignments for manpower enterprises, you must also bring assignment confirmations with a duration of a total of at least six months.
• If you run your own business, you must also bring documentation of this.
• Confirmation of admission to a school, if you intend to study.
• Any other documentation that shows you intend to stay in Norway for six months or more.

Freedom of living Index: Norway

Corporate Taxes in Norway

• Residence: Limited companies incorporated in Norway and foreign companies with their effective management and control in Norway are treated as resident in Norway.
• Basis: Norwegian residents are taxable on worldwide income (unless income is exempt under an applicable tax treaty). Nonresidents are taxed only on Norwegian-source income. Branches are taxed in a manner similar to Norwegian limited companies, but only on Norwegian-source income.
• Taxable income: Corporate income tax is imposed on a company’s profits, which consist of business/trading income, passive income and capital gains (subject to an exemption for capital gains on shares). Normal business expenses may be deducted in computing taxable income.
• Taxation of dividends: Dividends received by a Norwegian resident limited company from another Norwegian limited company or a limited company resident in the European Economic Area (EEA) are 97% exempt from tax, with the remaining 3% taxed at the ordinary rate of 25%. For dividends received from a company in a low-tax jurisdiction within the EEA, the 97% exemption applies only if real business activities are conducted in that jurisdiction. Dividends received by a Norwegian resident limited company from a limited company located in a non-EEA country are 97% exempt if the Norwegian company has held at least 10% of the shares for at least two years and the foreign country is not a low-tax country.Intragroup dividends from Norwegian companies are 100% exempt from taxation, provided the shareholder owns and controls more than 90% of the subsidiary or the ultimate parent (which need not be Norwegian) owns and controls directly or indirectly more than 90% of the shares of both companies. The exemption for intragroup dividends also applies if the distribution is from a limited company resident in the EEA, provided the distribution would qualify for the 97% exemption had there not been an intragroup distribution.
• Losses: Losses may be carried forward without limit. Liquidation losses may be carried back two years.

• Foreign tax credit: Tax credits for foreign tax paid are available in two baskets: either low-tax or other. The maximum credit within each basket is limited to the lower of the foreign tax paid or 25% of the foreign-source income. Credit for underlying tax is available if a dividend is (fully) taxable in Norway and the Norwegian limited company has held at least 10% of the shares in the foreign payer for at least two years.
• Participation exemption: Capital gains derived by a Norwegian limited company on the disposal of shares in another Norwegian (or EEA resident) limited company are exempt from taxation. For gains realized on the disposal of shares in a company in a low-tax jurisdiction within the EEA, the exemption applies only if real business activities are conducted in that jurisdiction. Capital gains realized by a Norwegian limited company on shares in a company resident in a non-EEA country are exempt from taxation if at least 10% of the shares have been held for at least two years and the foreign company is not resident in a low-tax jurisdiction.

Compliance for corporation:

• Tax year: Calendar year
• Consolidated returns: There are no provisions for consolidated returns, but Norwegian group companies may make group contributions.
• Filling requirements: Advance payments of corporate taxes are due twice a year (on 15 February and 15 April in the year following the tax year). Any (remaining) shortfall is payable during the fall, normally in November. The tax authorities estimate the amount of the first two payments based on the previous year’s income. The last payment is based on a tax return, which companies must file by 31 March if filed in hard copy. Resident companies are allowed to file tax returns electronically by 31 May.
• Penalties: Penalties normally are 30% or up to 60% of the tax that is, or could have been, avoided. Interest also can be charged.
• Rulings: The tax authorities may issue an advance ruling at the request of the taxpayer on the tax consequences of a specific future transaction.

Consulting & Advisory services

• Due diligence process
• Foreign Market entry & Supplier search in Norway
• Business Plans & Descriptions
• Development & Capital Advisory
• International Tax Planning
• Funding & Investor Search
• Taxation in Norway
• Business Restructuring via Offshore entities
• Exit Strategy & IPO
• Problem solving in Norway by Novasigma Accounting & Law partner offices

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Incorporation services in Norway

• New company formations in Norway
• Company Closures and liquidations in Norway

Company administration in Norway

• Legal registration address service for a Norway company
• Company secretarial service
• Nominee director services
• Nominee shareholder/ technical UBO services

Additional business services in Norway (by Novasigma Certified Partners)

• Virtual office services in Norway
• Hosting services
• Real estate in Norway (offices, trade facilities, industrial)

• Bookkeeping and Accounting Package
• Invoicing and payments
• Annual accounts
• Monthly Reconciliation
• Monthly financial statements (including balance sheet and income statement)
• Payroll services
• Income and tax return
• Management accounts

Value Added Tax (VAT)

• VAT registration
• Advice on VAT scheme options
• VAT returns and declarations

Audit

• Annual accounts in view of an annual audit and attend accounting audits

Legal services in Norway for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Norway team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

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Banking services in Norway

• Business bank accounts in Norway
• Personal bank account opening for business owners in Norway
• Payment service providers
• Investment solutions
• Alternative banking solutions

Financial services in Norway

• Debt collection services
• Invoice funding & cash flow solutions
• Factoring
• Leasing
• Wealth management