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Corporate Taxes in Norway in 2022-23: Complete Guide

This article discusses the various corporate taxes in Norway imposed on firms located there. All commercial activities conducted within Norway or controlled in Norway are generally taxed under Norwegian taxes, except if specified in the applicable convention on taxes.

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Corporate Taxes In Norway

The goal of Norway’s government for the tax system is to efficiently draw international investments. When establishing an enterprise in Norway it is essential to know whether or not business operations will be tax deductible for Norway. 

Companies with residents outside of Norway are not subject to taxation on their activities within Norway.

corporate taxes in norway

All commercial activities conducted within Norway or controlled in Norway are generally taxed under Norwegian taxes, except if specified in the applicable convention on taxes.

In this article, we will be going to discuss in detail the various corporate taxes in Norway imposed on firms located here. Therefore, without any further ado, let’s learn more about the corporate tax rate in Norway.

Corporate Income Tax in Norway

Based on domestic tax laws, Norway has a very low threshold for corporation taxation. However, the firms that are registered in Norway must pay a CIT rate of 22% of their net earnings as corporate taxes in Norway. 

Eventually, any foreign firm will be subject to corporate taxes in Norway, if it engages in commercial activities in Norway, or hires workers to be employed within the country.

But, a suitable tax treaty could provide an exemption from Norway corporate taxes obligations. Thus, the assessment of tax liability should be made specific to each foreign business. 

The fundamental rule of the tax treaty states that foreign companies are tax-exempt if it has a permanent location within Norway.

Various corporate taxes in Norway

various business taxes in norway

Corporate taxes in Norway on profit are taxed with the standard amount of 22%. Furthermore, the income is taxed to the owner’s hands via capital gain and dividend taxes. 

Here, we will understand the various corporate tax in Norway, which are imposed on particular businesses operating in Norway.  

1. The method of exemption 

The exemption method signifies that limited companies are exempt from taxation on dividends as well as on capital gains arising from the transfer of shares. In turn, the ability to deduct losses from shares was eliminated. 

Together with the idea of a taxation system of shareholders who are individuals, the dividends and gains from share gains will now be taxed upon extraction in the company sector, but only to the extent that the earnings exceed a risk-free rate of return.

2. Taxation of petroleum-related operations 

The taxation of petroleum-related activities is dependent on the rules that govern normal business taxation. There is a substantial surplus income (resource rent) that is derived from the extraction of gas and oil.

So, a tax of 51% of income from the extraction of petroleum is in place, as well as the normal taxes on income of 23%. Therefore the marginal rate of tax for the excess earnings within the petroleum industry is 78%. 

3. Power plants and taxes 

Taxation for power stations is determined by the rules of the taxation of businesses in general. There is a significant extra return (resource rent) due to the hydropower generation. 

This is why a tax rate of 30% on the income from hydropower plants was implemented, in addition to the normal revenue tax rate of 23%. Therefore, the marginal rate of tax for the excess earnings within the energy sector is now 58%. 

4. Taxation of the shipping income 

Shipping companies that earn income are exempt from taxation of income, however, they must have to pay tax on the vessels they own, as well as sometimes, the vessels they employ.  

Taxes are based on the net tonnage of vessels (tons). Tonnage tax has to be paid regardless of whether the vessel was operating or not.

Corporate Tax Return in Norway

The fundamental rule applies that all Norwegian corporations and foreign businesses operating, and based in Norway have to pay Norway corporate taxes and are also required to prepare corporate tax returns. 

Note that, foreign firms are legally required to file a corporation tax return even if it could be tax-free under an international agreement on taxes. The inability to file annual tax returns or to file a tax return with inaccurate or incomplete information can result in additional tax and mandatory fines.

Fundamental business taxes in Norway for corporations

Businesses that have a residence outside of Norway are tax-exempt only on their business taxes in Norway. Any business activity conducted in Norway or controlled by Norway is usually affected by Norwegian taxation, except when stipulated in a tax treaty.

Here are the corporate taxes in Norway for firms:

  • The corporate tax rate in Norway is 22%.
  • National Insurance contribution of 14.1%.
  • Some zones have a lower threshold.

Norwegian companies that are registered with the Norwegian government do not need to pay any tax on wealth for their assets net.

  • Employers with employees who work in Norway must pay employer contributions based on the gross amount of remuneration earned by employees, which includes benefits in kind as well as pension contributions.  
  • Employers with a foreign domicile are also legally required to pay employee contributions to employees who are employed in Norway subject to the possibility of exemption.  
  • Employer contributions can be deducted to the extent of corporate income tax. 
  • The corporate tax rate in Norway for employer contributions varies based on the location the company’s operations are conducted and an average Norway corporate tax rate is 14.1%.
  • There are five zones with decreased rates of 10.6%, 7.9%, 6.4%, 5.1%, and 0% respectively.
  • Municipalities can decide whether or not to tax property, however, some municipalities haven’t implemented it. If it is implemented, then the corporate tax rate in Norway on a property can vary between 0.2% to 0.7%.

Taxes and Legal responsibilities

The Norway corporate tax rate of 22% must be paid by companies operating in Norway on their net earnings. The tax regimes that are specific to Norway are in place for income from the exploration of oil and gas resources, shipping revenue, and the income from the generation of hydropower.

However, the dividends, income, interest as well as capital gains from the disposal of assets as well as foreign-sourced income is tax deductible in Norway. For residents of limited liability companies, or other entities that participate in the exemption method, it applies to dividends and gains from shares and partnerships interest. 

There is no tax separate on capital gains, so these gains can be taxed as normal income, at the general Norway corporate tax rate of 22%.

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Conclusion

If the business earns income that is tax-deductible to Norway, then the firm is required to file a tax report annually. There is no particular corporate tax registration, however, the tax office demands that all registered companies follow the various reporting requirements and submit corporate tax returns.

If you have any queries regarding Norway corporate taxes, get in touch with our professional experts at Odint Consultancy. Our experts will help you by providing complete details about corporate taxes in Norway.

FAQ’s

Taxation on general income encompasses all taxable income (i.e. income earned from the business, employment, and capital) which is at an annual rate of 22%.

In addition to the income tax and social security benefits, Norway levies a 0.85% tax on wealth on residents’ assets that are so greater than 1.5 million Norwegian Kroner ($172,000).

The high tax rate is the result of the massive Norwegian welfare system. The majority of the tax revenues are used for public services, such as healthcare services, the running of schools, hospitals, and transportation.

Anyone who is employed in Norway is required to have a tax-deducting card. If you are a foreign employee in Norway you can choose between two ways to pay taxes. 

Taxation for power stations is determined by the rules of the taxation of businesses in general. There is a significant extra return (resource rent) due to the hydropower generation. 

This is why a tax rate of 30% on the income from hydropower plants was implemented, in addition to the normal revenue tax rate of 23%. Therefore, the marginal rate of tax for the excess earnings within the energy sector is now 58%. 

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