Foreign multinationals doing business in Norway are often surprised by the multitude of compliance obligations, and by the efficiency of the Norwegian public authorities when it comes to becoming aware of their presence in Norway.
Doing business in Norway
Although the basic compliance obligations may appear to be burdensome, failure to comply can result in severe sanctions. As always, it is better to do the right things from the start than to clean up afterwards. Continue reading for a general overview of the most important topics that foreign companies must consider when conducting business in Norway.
Important topics to consider:
- What kind of entity?
- Registration and reporting obligations
- Corporate tax
- Payroll tax and employee taxation
- Employment law
- Value Added Tax (VAT)
- Import and export of goods and services
- Accounting and audit
What kind of legal entity?
Business activities may be organised in various ways. You must consider which entity that best suits your purposes, taking into account commercial considerations, tax and VAT issues, compliance and administrative costs, limitation of liability, etc.
The most common alternatives are:
- Branch (permanent establishment or NUF)
- Limited Liability Company (AS or ASA)
- Partnership and joint venture (ANS, DA, KS)
Everyone that conducts business in Norway must register with the centralised Registry at Brønnøysund. The Registry grants the enterprise a Norwegian ID number, called “organisation number” or “org.no.” Such org.no is required when entering into contracts, invoicing, communicating with public authorities, etc.
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There is no specific corporate tax registration, but the tax office has access to the Registry at Brønnøysund. Thus, the tax office expects that all entities comply with all the various reporting obligations and file a tax return. This applies even if tax liability may be exempted according to a tax treaty.
Also, note that foreign entities seconding employees to Norway must file reports to the tax office upon commencement of the work. These employees must obtain a Norwegian personal ID number (called “D-number”). In order to obtain the D-number the individual must physically meet at the tax office for an ID-control.
Find out more about tax in Norway.
In principle, all foreign enterprises conducting business activities in Norway are subject to Norwegian corporate tax at a rate of 25 %. However, Norway has entered into tax treaties with about 90 countries, which may provide exemption from Norwegian tax liability. Thus, an assessment of tax liability must be made specifically for each foreign enterprise.
Visma can also assist with individual tax return to Norway.
Employee tax and social security contribution
Salary is taxed at rates up to 38.7 %, and the basic rule is that individuals working in Norway become subject to Norwegian tax from day one. However, a tax exemption may be granted according to the tax treaty between Norway and the home country of the individual.
The employee will also have to pay contribution of 8.2 % to the Norwegian social security system unless an exemption is granted according to the relevant social security agreement.
Also, note that employers with employees working in Norway may suffer Norwegian payroll tax of up to 14.1 % (employer social security contribution) unless an exemption is granted.
Employees working in Norway are covered by the Norwegian working environment regulations, including provisions on minimum salary in certain industries.
The Norwegian default VAT rate is 25%, although reduced to 15% on food and 10% on e.g. public transportation, hotel accommodation.
Enterprises selling goods or services exceeding NOK 50.000 over a twelve-month period are obliged to register for VAT in Norway and add VAT on the invoices. On the other hand, a VAT-registered entity is entitled to a refund of the input VAT on its own purchases of goods and services used in the business. The VAT is reported on VAT returns, which normally are filed every other month.
A foreign VAT liable enterprise without any fixed place of business in Norway must register via a Norwegian based VAT representative. The VAT representative is obliged to control that the VAT handling is correct and is responsible for filing the VAT return. It is expected an ease of these rules, which will imply that enterprises from certain EEA states no longer will be required to appoint a Norwegian VAT representative. Visma employs several VAT experts and acts as a VAT representative for a vast number of enterprises in various industries.
Import and export of goods and services
When importing goods and services, import-VAT and custom duties might incur, and the actual customs transaction is based on the principle of declaration. Bear in mind that Norway is not a member of the EU and thus regarded as a third country in relation to transaction of goods and services cross border from the EU. It is possible to obtain custom credit upon application.
Accounting and audit
In general, all entities conducting business in Norway must keep books of accounts based on the Norwegian general accepted accounting principles (“NGAAP”), and the annual accounts must be filed with the Norwegian Registry of Accounts. Note that Visma is the largest accounting bureau in Norway.
Further, note that an independent auditor shall audit the accounts when certain thresholds are met.
Sanctions and penalty charges
From a pure business perspective, you will experience that any committed business partner or principal will require that foreign contractors or business partners comply with Norwegian laws and regulations. Further, for non-compliance, the authorities may levy serious sanctions including penalty taxes and interest charges, late filing penalty charges, deemed discretionary assessments, etc.
Visma Advokater has offices in Oslo, Kristiansand, Stavanger, Bergen and Trondheim. We are more than 35 professionals with extensive experience in corporate law – including TAX and VAT, labour law, public procurement, company law and contract law. Our lawyers are happy to assist you with any of the above subjects. Please do not hesitate to contact us should you have any questions.
Contact information: Martin Wikborg, mobile: +47 98 20 62 42, e-mail: firstname.lastname@example.org