All companies that are incorporated under Norwegian company law are, as a general rule, regarded as tax resident in Norway and taxable in Norway for their worldwide income. However, companies incorporated under Norwegian company law, but treated as solely resident in another country under a tax treaty between Norway and that other country, will be treated as not resident in Norway for domestic tax law purposes.
Foreign corporations are regarded as tax resident in Norway if genuine management of the company is in Norway. When assessing whether genuine management is in Norway, one should take into account where management at board level and daily management are exercised, but also other circumstances concerning the organisation and business of the company.
Permanent establishment (PE)
According to Norwegian domestic law, a foreign company is liable to tax in Norway when engaged in a business that is either conducted in or managed from Norway. The tax liability is limited to income that is derived from Norwegian sources. As a general rule, non-residents without a PE are not liable for tax on capital gains when selling Norwegian financial instruments. However, if the financial instrument is connected to a business that is conducted in or managed from Norway, the sale of the financial instrument can trigger taxation in Norway.
The legislation does not contain a reference to the treaty concepts of 'permanent establishment' or 'permanent representative'. The threshold for tax liability is normally lower under Norwegian domestic law than the taxing right afforded to source states under double tax treaties (DTTs).
With respect to DTTs, the Norwegian tax authorities will, to a large extent, follow the Organisation for Economic Co-operation and Development (OECD) Commentaries when interpreting the relevant DTT, provided the wording is similar to the OECD Model Tax Convention.