Norway

The general corporate income tax rate is 22%. There are no specific state or provincial rates.

However, several sector-specific regimes apply such as:

• Petroleum. Ordinary 22% tax plus 71.8% special tax, for an effective 78% marginal rate, with a cash-refund for exploration losses.
• Hydropower. 22% ordinary tax plus a resource rent tax of 57.7% on certain hydropower plants, for an effective combined rate of 67%.
• Aquaculture. 22% ordinary tax plus a resource rent tax of 32.1% on income above a threshold, for an effective combined rate of 47%.
• Onshore wind power. 22% ordinary tax plus a resource rent tax of 32.1%, for an effective combined rate of 47%.
• Shipping. Qualifying companies pay tonnage-based tax instead of ordinary income tax.

The Norwegian Act for the Pillar Two Income Inclusion Rule (IIR) and Domestic Minimum Top-up Tax (DMTT) was implemented in Norway from 1 January 2024 through the Supplementary Tax Act (in Norwegian: Suppleringsskatteloven). The Supplementary Tax Act more or less mirrors the OECD model rules. The rules apply to multinational enterprise (MNE) groups and large-scale domestic groups with consolidated annual revenues of at least EUR 750 million in at least two of the four preceding fiscal years. The effective minimum tax rate is 15%. The Undertaxed Profits Rule (UTPR) is implemented in Norway with effect from 1 January 2025.

Norwegian resident companies are subject to corporate income tax on their worldwide income at the rate of 22%. However, capital gains from the realisation of shares or received dividends will to a large extent be exempt from taxation when this income qualifies for the Norwegian participation exemption method pursuant to section 2-38 of the Norwegian Tax Act.

Norwegian limited liability companies are generally exempt from tax on capital gains derived from the realisation of shares in qualifying investments, pursuant to the Norwegian participation exemption method. Correspondingly, losses upon the realisation and costs incurred in connection with the purchase and realisation of these shares are not deductible for tax purposes. However, other costs incurred in connection with the ownership of such shares, such as administrative or strategic costs related to the tax-exempt share income, remain deductible pursuant to section 6-24(1) of the Norwegian Tax Act.

Furthermore, limited liability companies are largely exempt from tax on dividends distributed from a qualifying investment, pursuant to the Norwegian participation exemption method. However, 3% of otherwise exempt dividends must be included as taxable income, unless the limited liability company holds more than 90% of the shares and the voting rights of the company. With the standard income tax rate of 22%, this results in an effective tax rate of 0.66% (22% x 3%).

Additionally, Norwegian limited liability companies distributing dividends to qualifying shareholders according to the participation exemption method are not required to withhold withholding tax on these distributions.

Shares in limited liability companies within the EEA qualify for the Norwegian participation exemption method. Shares in companies that are resident in low tax jurisdictions within the EEA must be genuinely established and conduct genuine business activity to qualify. Shares in companies outside of the EEA will qualify if the Norwegian company has held at least 10% of the capital and at least 10% of the votes that can be cast at the general meeting of the company for at least two years, provided that the company is not tax resident in a low-tax jurisdiction outside the EEA. Shares in a company that is tax-resident in a low-tax jurisdiction outside the EEA will not qualify under the Norwegian participation exemption method.

Norwegian resident companies are taxed on their worldwide income, including foreign-source income. Double taxation is relieved primarily through tax treaties. Non-resident companies are generally taxed only on Norwegian-source income. Norway does not have the right to tax capital gains on the sale of shares for a non-resident company (non-residential capital gains tax). For Norwegian-controlled foreign corporations resident in low-tax jurisdictions, Norwegian shareholders are taxed on their proportionate share of the company’s surplus, determined under Norwegian tax rules as if the company were itself a Norwegian taxpayer, irrespective of whether any distribution is made from the company.

The general VAT rate in Norway is 25% and applies to all supplies of goods and services not qualifying for another rate or an exemption. There are also two reduced VAT rates: A reduced rate of 15% applies to supply of food and certain goods, while a reduced rate of 12% applies to services like transport and cultural events. A 0% rate applies to specific items such as books and international transport.

There may be customs duties on agricultural products, food, clothes and textile products.

For transfer of real property, there is a stamp duty of 2.5% of the market value of the real property to be transferred.

Dividend distributions from a Norwegian company to a non-resident shareholder are subject to withholding tax in Norway at a standard rate of 25% unless a reduced rate is applicable under a tax treaty or the Norwegian participation exemption. The participation exemption may exempt dividend distributions to qualifying shareholders from withholding tax entirely.

Similarly, payments such as royalties and interest made from a Norwegian company to an entity in a low-tax jurisdiction are taxed in Norway at a rate of 15%, unless a reduced rate is provided for under a tax treaty. This withholding applies only to payments to related parties. In addition to royalties on intellectual property, the withholding tax on royalties extends to payments for the use of, or the right to use, ships, vessels, rigs and similar assets, aircraft and helicopters.

Norway has an extensive tax treaty network with other jurisdictions. Most of the tax treaties are based on the OECD Model Tax Convention. Hence, withholding tax on dividend payments, interest payments and royalties can in many cases be reduced to 0%.

Norway operates a separate PAYE withholding scheme for foreign employees. Under this scheme, foreign nationals working in Norway who meet the eligibility criteria are taxed at a flat rate of 25% (including national insurance contributions) on their Norwegian-source employment income. The scheme is voluntary in the sense that eligible employees may elect to be assessed under the ordinary income tax rules instead.

The Norwegian general anti-avoidance rule was for many decades an uncodified doctrine developed through case law and legal theory. It is now codified in the Tax Act section 13-2.

The statutory general anti-avoidance rule has a two-part structure consisting of a basic condition and an overall assessment. Both conditions must be satisfied for the rule to apply. There is avoidance when the main purpose of an arrangement or multiple interrelated arrangements is to achieve a tax advantage, and, following an overall assessment, the arrangement as structured cannot form the basis for taxation. Relevant factors in the overall assessment include, inter alia, the following:

• intrinsic commercial value and effects of the arrangement other than tax advantages in Norway or abroad;
• the magnitude of the tax advantage and the degree of tax motivation;
• whether the arrangement represents an impractical route to the financial objective of the arrangement;
• whether the same outcome could have been achieved in a manner which does not fall within the scope of the present section;
• the legal structure of the relevant tax rules, including whether the scope of a rule is sharply defined in terms of timing, quantity or otherwise; and
• whether tax rules have been exploited contrary to their purpose or fundamental tax law considerations.

If the conditions for applying the statutory general anti-avoidance rule are met, taxation can be carried out in a way that reflects the economic content of the disposition. If taxation based on economic content cannot be carried out, taxation may occur by analogy of unfavourable tax rules or by restrictive interpretation of favourable tax rules. Such adjustments are only carried out to the extent necessary to eliminate the tax advantage.

The general anti-avoidance rule also applies to social security contributions, employer’s national insurance contributions and the financial activity tax.

In addition to the general rule, a specific anti-avoidance rule follows from section 13-3 of the Tax Act which applies to reorganisations and ownership changes aimed at exploiting tax positions that are unrelated to any asset or liability, such as a deficit from the current or previous year. Where the provision applies, an advantageous position lapses, while a disadvantageous position will be recognised as income with no right of set-off against loss nor can it form the basis of any group contribution.

There are no public statistics showing what types of issues most often lead to tax controversies in Norway, as many tax controversies are resolved during administrative proceedings and not available to the public. However, in our experience the following can be mentioned as frequent areas subject to tax controversies in Norway:

• transfer pricing;
• VAT;
• shareholder taxation;
• anti-avoidance; and
• procedural and penalty disputes.

Among sectors that are under more focus for control are the petroleum, hydro power production, wind power production and aquaculture industries. These sectors are all subject to a higher level of taxation, through special resource rent tax regimes. Strict control with shipping companies qualifying for the tonnage tax system is also an important focus for the Norwegian tax authorities.

In recent years, the Norwegian tax authorities have increased their focus on shareholders and the taxation of shareholder-level arrangements. Particular attention is directed at transactions and dispositions between shareholders and their companies, including dividend distributions, loans and other value transfers. This trend reflects the broader political debate on wealth taxation and perceived opportunities for shareholders to hold substantial value within corporate structures for private benefit. An emerging area of controversy is also exit taxation, driven by the significant tightening of the Norwegian exit tax rules over recent years.

The Tax Administration Act of 2016 (in Norwegian: Skatteforvaltningsloven), which entered into force on 1 January 2017, is the primary legislative framework governing the process and resolution of tax controversies in Norway. The act regulates the administrative process, including tax assessments, tax audits, reassessments and the imposition of administrative penalties. It also sets out the taxpayer’s right to appeal decisions to the national Tax Appeal Board (in Norwegian: Skatteklagenemnda) and to claim for compensation for costs incurred in connection with changes to a tax assessment. Other important legislation includes the Tax Payment Act, which regulates the collection and payment of taxes.

An important part of the framework is the limitation period for reassessments. As a main rule, the deadline to challenge a taxpayer’s self-assessment is five years from the end of the relevant income year. This is extended to 10 years in grave cases, where the taxpayer is subject to increased penalty tax or reported to the police for tax fraud.

The Norwegian Tax Administration oversees the administration of all direct taxes and VAT for domestic sales. Companies that are dissatisfied with decisions rendered by the tax office have the option to submit complaints to the Tax Appeal Board. The Tax Appeal Board is an independent administrative appeal body, which cannot be instructed by the Norwegian Tax Directorate or the Ministry of Finance. Decisions made by the Tax Appeal Board can subsequently be brought before the ordinary courts for further review and resolution. Unlike many jurisdictions, Norway has no specialist tax court. All tax disputes at the judicial level are heard by the general civil courts, proceeding through the district court (in Norwegian: Tingretten), the court of appeal (in Norwegian: Lagmannsretten) and ultimately the Supreme Court (in Norwegian: Høyesterett).

There are no alternative methods, such as mediation or arbitration, to resolve ongoing domestic tax controversies in Norway. However, limited but important mechanisms exist outside the ordinary court process.

Mutual Agreement Procedure (MAP)

For cross-border disputes, taxpayers suffering double taxation due to transfer pricing adjustments or other treaty-related issues may invoke the Mutual Agreement Procedure under the applicable tax treaty. The Norwegian competent authority will negotiate with the counterpart jurisdiction to reach a resolution eliminating double taxation.

Advance ruling

In cases where uncertainty surrounds the correct tax treatment of specific future transactions, taxpayers may request an advance ruling (in Norwegian: Bindende forhåndsuttalelse) from the tax authorities. These rulings are binding for the tax authorities provided that the taxpayer adheres to the presented plan. Alternatively, taxpayers may seek advance guidance from the tax authorities on ambiguous matters, though the tax authorities are not bound by this guidance.

Parliamentary Ombud

It is also worth noting that the Parliamentary Ombud (in Norwegian: Sivilombudet) may review procedural complaints against the tax authorities. Although the Parliamentary Ombud’s statements are not legally binding, they carry significant practical authority as the tax authorities will generally follow them in practice. Notably, the Parliamentary Ombud’s statements in a specific case may allow for the reopening and reassessment of matters that would otherwise have been time-barred under the standard limitation periods of the Tax Administration Act.

Voluntary disclosure

Norway operates a voluntary disclosure scheme (in Norwegian: Frivillig retting) under which taxpayers who have not previously disclosed income or assets may come forward voluntarily to correct their tax position. Where a valid disclosure is made, there is an exemption from penalties that would otherwise apply. The scheme does not apply if the disclosure is deemed to be prompted by control measures that have or will be implemented, or by information that the tax authorities have received from others. It should be noted that the scheme is currently under assessment by the Norwegian authorities and may be removed or significantly curtailed.