Norway

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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

     

 

 

Ease of Doing Business ranking

Overall rank 2017: rank 6th (change in rank: +2)
– Starting a business: rank 21
– Dealing with construction permits: rank 43
– Getting electricity: rank 12
– Registering property: rank 14
– Getting credit: rank 75
– Protecting minority investors: rank 9
– Paying taxes: rank 26
– Trading across borders rank 22
– Enforcing contract: rank 4
– Resolving Insolvency: rank 6

 

New businesses registered in 2014: 25888

Freedom of living Index: Norway

Overall rank 2016: 23th (66/100 points)
– Property rights: 90/100 points
– Freedom from taxes: 53/100 points
– Freedom of speech/religion: 100/100 points
– Limited government: 42/100 points
– Gun rights: 30/100 points
– Drug rights: 25/100 points
– Freedom from corruption: 87/100 points
– Freedom from inflation: 76/100 points
– Business freedom: 90/100 points

 

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.
Taxable income: Income tax liability is based on worldwide income, net of expenses (including interest paid) and foreign income taxes. Taxable income includes salaries; dividends, interest and royalties; income from real property and other capital; industrial, commercial and agricultural profits; and shares of partnership net income, whether or not withdrawn from the partnership.
VAT registration: A foreign entity cannot register for VAT purposes only; the general tax registration is applicable for all taxes.
– VAT Rates: The standard rate is 25%; a lower rate of 15% applies for food and a 10% rate applies for passenger transport, hotel accommodation and cinema tickets. Certain transactions are zero- rated or exempt.
Surtax: No
Withholding tax Dividends – No withholding tax is imposed on dividends paid by a Norwegian limited company to an EEA resident corporate shareholder, provided the shareholder conducts a real business activity in the relevant jurisdiction. Otherwise, the applicable tax treaty rate will apply. Distributions to shareholders resident outside the EEA are subject to a 25% withholding tax, unless the rate is reduced under a treaty.

Interest – Norway does not levy withholding tax on interest payments.

Royalties – Norway does not levy withholding tax on royalty payments.

Technical service fees – Norway does not levy withholding tax on technical service fees.

Branch remittance tax – No

Transfer tax: Transfer tax generally is not levied, although there are some exceptions (e.g. registration fees on cars).
Real property tax: Municipal authorities levy “rates” on the occupation of real property. A property tax applies to the assessed value of real property, at rates ranging between 0.2% and 0.7%, depending on the location of the property. Some municipalities do not levy the tax.
Social security: A person resident or working in Norway is a compulsory insured “member” under the Norwegian National Insurance Scheme (NI-scheme). The NI-scheme is financed by contributions from its members, employers of members and the Norwegian state. Parliament sets the contribution rates annually. The employee’s contribution is 8.2% of gross income derived from employment. The employer’s contribution is differentiated regionally and ranges between 0% and 14.1%. Specific rates (a maximum of 11.4 %) apply to income from self-employment and remuneration for

work performed by partners in partnerships. The contribution for other types of personal income (e.g. pensions) is 5.1%.

Anti-avoidance rules:
– Transfer pricing In principle, intercompany transactions are acceptable for tax purposes if they are based on the arm’s length principle. Documentation requirements apply.
– Thin capitalization rule Interest on related party debt generally may be deducted to the extent the interest does not exceed 25% of adjusted EBITDA.
– Disclosure requirements no

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.

Services for corporations interested in Norway

  • Consultation and advisory (business, tax, legal) services before incorporation / during your business operations in Norway
  • Assistance in incorporation process: Tailor made company formation or shelf companies available
  • Administration services available for new companies incorporated through Novasigma

For corporations operating in Norway

  • Banking and financial solutions for Norwegian company
  • Accounting and Audit services for Norwegian company
  • Legal services for Norwegian company

For individuals and families interested in  

  • Consultation and advisory (tax, legal) services before re-located to Norway
  • Assistance in immigration process when moving to Bulgaria (residency permanent, work permit, tax residency)
  • Incorporation and administration services for your privately held Norwegian holding company

For individuals and families who hold the Norwegian residency

  • Banking services in Norway for private persons
  • Local and international accounting services for Norwegian tax residents
  • Local and international legal services for Norwegian residents

Interested in Norway? Please leave us a message and we will come back to you shortly.

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