Norway is a great place to do business. As a foreign company you will find Norway as a trustable country with safe business environments, efficient decision-making processes and friendly counterparts. In this article we describe tips and tricks to think about and which compliance you must have in place before starting your business in Norway.
The business culture in Norway is based on trust and basic legal principles. Businesspeople in Norway are open for deals with foreign companies, and it is quite easy to enter into dialogs with Norwegians. The Norwegian companies normally have a flat structure with minimal hierarchy, and be aware of that in Norway we do not have a “bargaining” culture. Norwegians prefer to have the best price presented at first, and it can sometimes be challenging to communicate with Norwegians if the counterpart push them too much.
Another small thing that is nice to be aware of is that normal contracts as employment agreements, purchase/supplier contracts and other «daily» legal documents are based on the law, not necessarily all details written in a document. The law will normally “win” over contractual clauses that are in conflict with the legal principles.
Unless your company only export goods to Norway, you must register an entity in order to operate legally. Registering an entity does not necessarily mean being taxable to Norway, but is still a requirement in order to engage into contracts with Norwegian parties and fulfil legal compliance. Before you register an entity, it is crucial to choose the right company structure. There are several paths to choose:
- Register branch (NUF) with VAT representative. In cases where you have a non-taxable operation, a simple branch of your foreign entity could be sufficient.
- Register a taxable branch (NUF). If your project or operation in Norway is taxable, you can register a branch of your foreign entity. This entity is obliged to file annual tax returns and annual accounts. No share capital is required for a NUF.
- Register a foreign owned LLC (AS). Register a unique LLC in Norway owned by the mother company abroad or other parties/entities. This requires share capital of minimum NOK 30 000 and at least 50% of the Directors (“Styremedlemmer”) from within the EU/EEA.
VAT and tax
Any organisation with a turnover above a threshold of NOK 50 000 is normally obliged to register for VAT in Norway. By being registered and submitting VAT returns, the company fulfils its obligations and may also receive deductions from expenses.
If a company only exports goods to Norway directly to end clients, there is no obligation to register for VAT. When goods are sent to Norway, the client must declare and pay the VAT themselves. Many foreign companies choose to still register in Norway with a representative to avoid hassle for end clients when they import goods.
Foreign suppliers of low value goods (value below NOK 3000) must calculate and collect VAT on their B2C sales in Norway, and will have to charge VAT to the customer on the point of sale. This type of VAT registration in Norway is a simplified version of the regular one, and does not require an entity or branch to be registered. The same regulation goes for electronic services sold from a business to private consumers. This scheme is called VOEC.
Contact ECOVIS today to find out if you need to register for VAT in Norway, and which type of registration that will be required.
Taxation for companies is a large subject in itself, but the general rule is quite simple. For taxable companies there is a profit tax of 22%, and in addition to this there might be a withholding tax deduction on dividends to foreign shareholders. Foreign shareholders (final dividend recipients) are liable to tax in Norway for dividends received from Norwegian companies. If the Norwegian distributing company does not know the identity and tax status of the foreign shareholder, the company must deduct 25% withholding tax on dividends.
The distributing company may however apply a reduced withholding tax rate in accordance with a double taxation treaty or a 0 percent tax rate pursuant to the exemption method in section 2-38 of the Norwegian Tax Act, if the shareholder has provided documentation that proves they’re entitled to a reduced withholding tax rate.
Project/assignment reporting through “RF-1199/RF-1198”
All assignments given to a foreign contractor on land or on the continental shelf with a value above NOK 20 000 must be reported in the Assignment and employee register. It’s the client’s duty to report the assignment. The foreign contractor is obliged to report the employees that work on the assignment. The forms you use to report the assignment are called RF-1199 and RF-1198.
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ECOVIS is a leading global consulting firm with its origins in Continental Europe with over 9000 employees in 80 countries. In Norway, ECOVIS assists international companies with compliance and global mobility, from company registration through work permit application, legal advice, house finding, VAT returns, tax advisory, accounting to annual tax declerations.