Norway

A Norwegian resident company is, as a starting point, subject to corporate income tax (CIT) on its worldwide income. Non-resident companies are, as a starting point, liable for CIT in Norway when engaged in a business that is either conducted in or managed from Norway. 

CIT is, in general, assessed at a rate of 22%. Certain companies within the financial sector are assessed at a CIT rate of 25%. 

Generally, income is taxable when the right to receive it arises and costs are deductible when the liability to cover the costs arises. The actual payment is generally not relevant. 

Petroleum tax regime

All upstream petroleum activity on the Norwegian Continental Shelf (NCS) is taxable to Norway. 

Taxation is based on net income at a marginal tax rate of 78%, which comprises the ordinary 22% CIT rate and a 56% special tax. All income is subject to 22% CIT, while only income from offshore production and pipeline transportation of petroleum on the NCS (offshore tax regime) is subject to the additional 56% special tax.  

Following the 2022 shift to a ‘sequential’ tax system, tax on upstream petroleum activities is calculated in two steps. Firstly, the tax in the ordinary 22% tax base is calculated. The resulting tax amount is then deducted from the special tax base, on which a ‘technical special tax rate’ of 71.8% is applied in order for the overall effective tax rate to remain 78%: 

Example: 

All upstream activity on the NCS must be consolidated within the company. There is no ring fence per oil field, and tax consolidation against other activity is limited.  

Crude oil sales from most of the fields are taxed at a predetermined market price set by an official board (i.e. the ‘norm price’). In theory, a norm price may be imposed on gas sales, but this has not been implemented in practice. A company may apply for a binding ruling for pricing of inter-company sales of gas, but not many companies have used this opportunity. The pricing of inter-company sales of gas must be in accordance with the arm’s-length principle. 

Under the Petroleum Tax Act, investments on the NCS can be deducted in the year of investment in the special tax base (i.e. against 71.8% tax). In the ordinary 22% tax base, the same investments must be depreciated on a linear basis over six years. 

The tax value of losses (both exploration losses and other losses) in the special tax base (71.8%) is refunded by the Norwegian State as a general loss refund. The general loss refund for Year 1 is paid as a cash payment part of the ordinary tax settlement, i.e. in Year 2. The loss refund can be pledged as security for external financing. 

The ordinary CIT value of losses (6.2%) is not refunded. It must be carried forward without interest. For companies in the closing down phase, there is a risk that this tax value will never be recovered. 

Special rules apply as to the deductibility of net interest costs in the special tax basis. 

A special regime ensures that transfer of licences on NCS is tax exempt; there is no step up in the tax basis. 

Note that dividends that stem from income subject to the special tax regime are exempted from dividend withholding tax (WHT). 

The Oil Taxation Office (OTO) has a special responsibility for the taxation of the petroleum sector. Generally, the OTO has a high focus on transfer pricing. 

As part of the financial measures for Norwegian businesses in relation to the COVID-19 situation, temporary amendments to the upstream petroleum tax regime were made for 2020 and 2021. These amendments continue to be effective for investment costs incurred in subsequent years to the extent such costs are part of a Plan for Development and Operation (PDO) or a Plan for Installation and Operation (PIO) (or application for exemption from such Plan) submitted by year-end 2022 and approved by the Ministry of Petroleum and Energy by year-end 2023. The amendments will apply for costs incurred until the start of production. 

Hydropower tax regime

The hydropower tax regime applies to income derived from the production of hydroelectric power in plants having an installed nominal capacity of 10,000 kVA. 

Net income from the production of hydroelectric power is taxable both at the ordinary 22% CIT rate and at a 57.7% resource rent tax. The ordinary CIT is deductible in the basis for the calculation of the resource rent tax, resulting in an overall marginal tax rate of 67%. 

The resource rent is calculated per hydro power plant. The gross income is, with some exceptions, calculated as the annual spot market price per time interval multiplied by the plant’s actual power production. Reference is made to the comments regarding the measurement period under the description of the onshore wind power tax regime. Actual income from power sold under certain standardised long-term power purchasing agreements (PPAs) are, however, recognised for resource rent purposes. In addition, actual income from green certificates and certificates of origin is included. Generally, expenses related to the power plant are deductible, except for interest costs, which are non-deductible for resource rent purposes. 

For resource rent purposes, investments in hydropower plants are deducted according to special rules. Investments made after 1 January 2021 may be fully deducted in the year in which they are made. Investments made before this date are depreciated according to separate rules. Rent expenditure and depreciation related to waterfalls are never deductible.  

Tax consolidation is mandatory within each hydropower producing company and is available on a group level provided the conditions for group taxation are met. Losses (negative resource rent) on a company level (eventually on a group level) will be compensated by the Norwegian state. 

In addition to ordinary CIT and resource rent tax, income from hydropower production is subject to natural resource tax. The natural resource tax is creditable against ordinary CIT (see Natural resource tax in the Other taxes section). 

Onshore wind power taxation 

As of 1 January 2024, Norway has introduced resource rent tax on onshore wind power production. This entails that net income from the production of wind power is taxable both at the ordinary 22% corporate income tax (CIT) rate and, in addition, at a 25% effective rate of resource rent tax (effective marginal tax rate of 47%). 

The income computation for the resource rent tax is based on the hydropower regime. As a main rule, the gross resource rent income is determined as spot market prices per time interval x actual power production. The actual power prices obtained will, however, be recognised, inter alia, where the power is sold pursuant to existing power purchase agreements (PPAs) concluded with unrelated parties before 28 September 2022 or PPAs concluded with unrelated parties after 28 September 2022 that satisfy certain conditions. In addition, the gross resource rent will include income from the sale of electricity certificates and guarantees of origin. 

Deductions in the resource rent income are granted, notably, for ordinary operating expenses, capital expenditure (with separate rules for historical and future investments, cf. below), real property taxes, and a simulated CIT calculated on the activity that is subject to resource rent tax. Financing costs are non-deductible in the resource rent. 

Deductions for capital expenditure are subject to separate rules for historical and future investments in onshore wind power assets. While future investments are fully deductible in the year of investment (cash flow taxation), historical investments are subject to transitional rules for calculating the tax values upon entry into the new regime and annual depreciation. 

For existing wind farms, negative resource rent income may be carried forward with a risk-free interest. For new wind farms, the tax value of negative resource rent income will be paid out to the taxpayer subject to the Norwegian tax authorities having controlled the tax assessment (subject to approval from the European Free Trade Association [EFTA] Surveillance Authority before taking effect). 

On May 19, 2025, the Ministry of Finance proposed that the main rule for determining gross resource rent income be amended to accommodate the planned change in the measurement period for the spot market—from hourly prices to spot market prices based on 15-minute intervals. This proposal aligns with an anticipated change in the European electricity market (the so-called "SDAC project") and is expected to be adopted. It is proposed that the measurement period for tax purposes should follow the determination period used by market participants and take effect at the same time that market participants implement the new determination period. 

In addition to resource rent tax, onshore wind power is subject to a production tax (excise duty) levied at a rate of 0.0237 Norwegian kroner (NOK) per kilowatt-hour (kWh) of electricity produced (rate applicable for FY 2025). 

Resource rent tax on aquaculture 

Resource rent tax on aquaculture was introduced in September 2022 with effect from 1 January 2023 and approved by Parliament on 31 May 2023. The effective tax rate of 25% applies to the production of salmon, trout, and rainbow trout in the sea phase, and implies a marginal tax rate of 47%. A tax-free allowance of NOK 70 million is granted at the corporate group level, making the smallest companies exempt from the resource rent taxation. The group definition includes companies with decisive influence over another enterprise by agreement as well as companies owned by related-party individuals. The tax-free allowance of NOK 70 million must be adjusted by the CIT rate of 22%, resulting in a net allowance of NOK 54.6 million. 

The resource rent tax is structured as a cash-flow tax, meaning revenues and costs are included in the tax basis in the year in which they are earned or incurred. Revenues are based on the market value of the fish at the time the fish are removed from the cages. From July 2024, an independent price board determines the market value/taxable income on certain qualities of fish, based on extensive reporting by the companies. For 2023, and the first six months of 2024, companies are responsible for determining the market values themselves.  

Companies subject to the resource rent tax can immediately deduct investments used exclusively during the sea phase. Deductions for investments made prior to 1 January 2023 are granted through deprecation of remaining tax values. Accordingly, there is no step-up in tax basis or other compensation for historical investments according to the tax authorities, but this is expected to be challenged by taxpayers. 

Negative resource rent income can be carried forward with interest and deducted from positive calculated resource rent income in subsequent years. The tax-free allowance cannot be used to generate a loss. If activities cease, the tax value of the negative resource rent will be disbursed.  

No deductions are granted for the value of fish farming licences, but a stipulated deduction is permitted for licences purchased at auction in 2018/2020 and allocated at fixed prices in 2020. The deduction is set at 40% of the actual remuneration paid to the central government divided over five years. 

The introduction of resource rent taxation has resulted in a significant increased focus on transfer pricing within the industry. 

Shipping tonnage tax regime

The tonnage tax rules in Norway are generally in line with those found in other European Union (EU)/European Economic Area (EEA) countries and imply that shipping income will be tax-exempt on a permanent basis. On 14 December 2017, the EFTA Surveillance Authority (ESA) announced that the Norwegian tonnage tax regime is approved for a new ten-year period, with certain amendments. 

Norwegian tonnage-taxed companies are allowed to keep only certain kinds of assets inside the tonnage regime (legal assets) and are not allowed to have income from non-tonnage-taxed activities except some financial income. If the requirements are not fulfilled, the company will fall outside the scope of the model and be taxed at the ordinary rate (22%). 

Qualifying assets 

A tonnage-taxed company must own at least one qualifying asset (i.e. a vessel, for example bulk tankers, container vessels, car carriers, tugboats, and entrepreneurial vessels and auxiliary vessels for use in the petroleum industry), new building contracts, a 3% share in another tonnage-taxed limited company, or a 3% ownership interest in a qualifying partnership or controlled foreign company (CFC). As of the income year 2017, vessels engaged in the construction, maintenance, repair, and disassembly of windmills at sea are eligible as qualifying assets under the scheme 

Non-self-propelled barges are eligible for the tonnage tax regime with effect from 1 January 2018, provided certain conditions are met. 

Qualifying and legal business activities/income 

Qualifying business income is income from the operation of the company’s own and chartered vessels. There are limitations on chartering out vessels on bareboat. The limitations on bareboat chartering out in the approved regime are different for vessels in the offshore sector and vessels outside the offshore sector (traditional shipping). 

The following limitations apply for bareboat chartering out in the offshore sector: 

• Chartering out on bareboat terms may not exceed 50% of the company's fleet during an income year, alternatively over a period of four years.  

• Bareboat chartering out must not exceed a contract period of five years, with a possibility to extend the contract by another three years.  

• The strategic management of vessels chartered out on bareboat terms must be carried out from an EEA state.  

On bareboat chartering out outside the offshore sector, a distinction is made between contracts regarded as operational lease and financial lease. 

Chartering out on contract terms regarded as financial lease are not permitted under the regime. 

Bareboat contracts regarded as operational lease are allowed with the following limitations: 

• Chartering out on bareboat terms may not exceed 40% of the fleet per income year, alternatively over a period of four years.  

• The chartering period may not exceed one half of the vessel's lifetime.  

• The strategic management of vessels chartered out on bareboat terms must be carried out from an EEA state.  

For both the offshore sector and traditional shipping, the share of allowed bareboat chartering out is measured on group level. 

The limitations on bareboat chartering out will not apply to existing contracts that are not regarded as long-term. The assessment of what constitutes a long-term contract are different in and outside the offshore sector. Further, a transitional period will be implemented for the companies subject to the updated rules. 

Chartering in of vessels on time-charter terms is limited to 90% of non-EEA flagged vessels. These rules are not applicable for existing time-charter contracts. 

Furthermore, gains upon disposal of vessels and new building contracts are exempt from taxation. 

Income from related activities, such as the sale of goods and services onboard vessels, loading and discharging vessels, or leasing out containers and operations of ticket offices, is also exempt from taxation. The exemption also applies to income from the strategic and commercial management of the company’s owned and chartered vessels, as well as vessels owned or operated by group companies (more than 50% joint ownership), and vessels operated according to a pool agreement. Pure management companies are not included (i.e. all companies must have at least one qualifying asset). 

Financial income is permitted, except for income from shares in unlisted companies and ownership interests in partnerships that are not taxed under the tonnage tax system. The condition is that financial activities do not constitute a separate business. Net financial income is subject to ordinary taxation (22%). Currency gains and losses are partly taxable/deductible, and interest costs are partly deductible, depending on the proportion between the company’s finance capital and total book capital. 

Withholding tax (WHT)

Norway has domestic legal authority to impose royalty WHT at 15% on payment to related parties tax resident in low-tax jurisdictions. The 15% WHT also applies to lease payments for ships and other tangible assets paid to related parties resident in low-tax jurisdictions. 

Payments from Norwegian tonnage taxed companies are, however, exempt from the royalty WHT rule. 

Entrance into the tonnage tax system

Entry into the tonnage tax system is optional and may take place with effect from 1 January every year, provided that the company has fulfilled the conditions for the application into the tonnage tax system from the beginning of the year. Newly established companies will have direct entry and may enter into the tonnage tax system with an effective date from the date of incorporation. All qualifying companies within the same group are obligated to make the same election (tonnage taxation or ordinary taxation). The election is made in the corporate tax return filing.  

Companies that enter into the tonnage tax system are subject to a formal ten-year lock-in period. If a company exits the tonnage tax system before the lock-in period expires, it will be excluded from the tonnage tax system until after the initial lock-in period has ended. 

Upon entry into the tonnage tax system, the difference between market value and tax value of the company’s assets (including vessels, new building contracts, ownership interests in partnerships, and shares in CFCs/tax exempt assets) is taxed as a capital gain (22%) that can be transferred to the gain and loss account. 20% of the balance will be entered as income each year (balance method). There is continuity for financial assets and assets covered by the tax-exemption rules (qualifying shares and derivatives). 

Exit from the tonnage tax system

A shipping company may exit the regime on a voluntary basis or may be obligated to do so after breaching specific company requirements within the tonnage tax system. There is no specific exit charge when leaving the regime, and the tax value on the company’s assets will be adjusted to market value at the time of exit. However, a company that has untaxed gains calculated upon entry into the tonnage tax system could have a tax liability upon exit. 

Local income taxes

There is no county or municipal CIT in Norway.