Value-added tax (VAT)
The general VAT rate is 25% and applies to all supplies of goods and services not qualifying for another rate or an exemption. A reduced rate of 15% applies to supply of food and beverages, excluding tobacco, alcohol, medication, and water from waterworks. The reduced rate is not applicable to the supply of food and beverages consumed in restaurants and other food establishments.
The VAT rate of 12% applies to the television licence fee charged for broadcasting services provided by the Norwegian Broadcasting Company (NRK), domestic passenger transport services and procurement of such services, domestic ferry services related to transport of vehicles, accommodation services, cinema tickets, museum and gallery tickets, amusement park tickets, and sports events.
Exemptions with credit (zero-rated) include, but are not limited to, the following (please note that there might be specific conditions for the exemptions to apply):
- Export of goods and services.
- Goods and services for Norwegian offshore and non-resident ships.
- Transfer of a going concern.
- Supply of newspapers (including e-newspapers) and books (does not include e-books, which are currently subject to the 25% VAT rate).
- Sale of vessels and aircraft for use in taxable activity.
- Sale of vessels for use in search and rescue.
In addition to the above-mentioned exemptions with credit, the Norwegian government has proposed to zero-rate supplies of e-books and electronic publications in the national budget for 2019. As the proposed VAT zero rating will require changes in the existing regulations and an approval from the ESA, the government expects that the VAT zero rating can enter into force 1 July 2019 at the earliest. Please note that it is likely that these exemptions will be subject to specific conditions.
Exemptions without credit include, but are not limited to, the following (please note that there might be specific conditions for the exemptions to apply):
- Supply of works of art owned by the artist.
- Health services.
- Social services.
- Financial services, including banking, insurance, and the sale of shares (entities within the financial services sector are, in general, subject to a special financial activities tax, see below).
- Educational services.
- Sale and lease of real estate (accommodation and lease of parking lots are taxable).
- Services supplied by cultural and entertainment institutions.
Exemptions, whereby an option to tax is available, include the letting of immovable property to VAT-liable lessees following a specific VAT registration with the VAT authorities. Please note that an ordinary VAT-registered business is not required to specifically register for letting of property.
The registration threshold is met when supplies subject to VAT in accordance with the Norwegian VAT legislation (including self-supplies) exceed NOK 50,000 during a 12-month period. For charitable and public utility institutions and organisations, the threshold is NOK 140,000.
There are quite extensive customs duties on agricultural products, which must be paid upon importation. However, it is often possible to avoid customs duties on these products partly or completely by applying for an exemption from the agricultural authorities in advance. Some of these exemptions are subject to tariff quotas.
Clothes and some other textile products are also subject to customs duties upon importation to Norway, but imports comprised by free trade agreements (such as the EEA with the EU) and the General System of Preferences (for developing countries) are exempt. As a result, clothes will, as a general rule, not be subject to customs duties as long as the importer presents the necessary certificates of origin.
There are no customs duties on other products than agricultural products, clothes, and textile products.
Excise taxes are calculated on import and domestic production of the following:
- Petroleum products, including gas
- Alcoholic beverages
- Non-alcoholic beverages
- Ethanol for technical purposes
- Chocolate, candy, sugar, etc.
- Products containing the chemicals TRI/PER.
- Products containing the propellant gases HFK/PFK.
There are also excise taxes related to the following:
- Registration of vehicles
- Use of vehicles
- Emissions of NOx
- Sale of electricity
- Flight passengers
Real estate may, under certain conditions, be subject to property tax. It is up to the different municipalities to choose whether it wants to impose property tax on real estate. Not all municipalities impose property tax on real estate. The applicable rate varies between 0.2% and 0.7%, which is decided by the municipality. The tax base will normally be the estimated market value (with some adjustments).
Production equipment and production installations will be exempt from property tax from 2019, with a seven-year transitional period.
The maximum rate for property tax on private residences and leisure properties will be reduced to 0.5% from 2020.
Hydro power producers must pay property tax on the hydro power plant’s capitalised value using a capital interest rate of 4.5%. However, the basis for the calculation of the property tax should fall in the range of NOK 0.95 to NOK 2.74 per kWh of the power plant average production for the last seven years. For hydro power plants with nominal capacity less than 10,000 kVA, the property tax base will be the same as the tax value for income tax purposes.
A tax is levied on the registration of a change of ownership of real estate. The tax is calculated at 2.5% of the fair market value.
Net wealth taxes
There is no net wealth tax or other capital taxes for limited liability companies, investment funds, state-owned enterprises (according to the State-owned Enterprise Act), inter-municipal companies, and companies in which somebody owns a part in or receives income from, when the responsibility for the companies’ liabilities is limited to the companies’ capital.
Some institutional holders (e.g. mutual insurance companies, savings banks, co-operatives, taxable pension funds, self-owned finance institutions, mortgage credit associations) pay 0.15% (state) net wealth tax. The maximum net wealth tax rate for a corporate body is 0.85% (state and municipal tax figures for fiscal year 2019).
From the income year 2019, shares in quoted limited liability companies and equity funds are valued at 75% (80% for income year 2018) of quoted value as of 1 January of the year after the relevant income year for net wealth tax purposes. If quoted both on the Norwegian and a foreign stock exchange, the Norwegian stock exchange value will be applicable. If not quoted, the basis for taxation is, as a rule, the company’s net taxable value for wealth tax purposes as of 1 January of the income year in question. The basis for taxation of non-quoted shares in foreign companies is, as a starting point, the assumed market value of the shares as of 1 January of the assessment year.
There are no payroll taxes other than national insurance contributions and financial activities tax (see below).
National insurance contributions
Employers are subject to pay employers' national insurance contributions on the employees’ gross salary. The employers’ contribution rate varies between 0% and 14.1% based on the municipality of the head office of the business. The contribution shall be reported and paid on a bimonthly basis.
Financial activities tax
Entities within the financial services sector are, in general, subject to a special payroll tax. The tax rate is 5% and shall be calculated on the wage base. Companies where the employees use more than 30% of their time on financial services exempt from VAT will be comprised by the tax.
The exit rules levy taxes upon the migration of assets or liabilities. The tax is calculated by reference to the accrued but unrealised gains at the time of migration at a rate of 22% (25%). Exit tax is also levied if Norwegian CFC taxation lapses because the control requirement is no longer met or if:
- a Norwegian tax resident company transfers its tax residency (effective management) to another country
- a Norwegian tax resident company has assets or liabilities that are transferred to a PE that is tax exempt pursuant to a DTT, or
- a foreign company has assets or liabilities that are transferred from a Norwegian PE to the head office or a foreign PE of the same company.
Transfer of assets or liabilities from a PE of a Norwegian company to another PE in a country where the DTT in question is based on the credit method is, however, not regarded as a taxable event.
According to the rules, the tax treatment is different depending on the type of assets being transferred. Business-related operational equipment and financial assets being transferred out of Norwegian taxing jurisdiction are considered as taxable events, but the tax charge may be deferred if certain conditions are met. The main conditions are that the taxpayer is resident within the EEA/EU and has provided a guarantee for the deferred tax and interest charge. The transfer of intangible assets and inventory trigger immediate and unconditional exit taxation.
De minimis exception rules apply when determining whether the exit tax may be levied. Exit tax on the transfer of tangible assets is applicable only if the unrealised capital gains exceed NOK 5 million. Exit tax on the transfer of other assets and liabilities is only applicable if the unrealised capital gains exceed NOK 1 million.
Carbon dioxide (CO2) tax
A CO2 tax is calculated on petroleum that is flared and on natural gas emitted into the air, as well as on CO2 that is separated from petroleum and emitted into the air, and on installations used for production or transportation of petroleum. The CO2 tax is regarded as a normal operating cost for CIT purposes and is a fully deductible cost both for corporate and special tax calculations.
|Type of petroleum
||NOK per l/Sm3/kg
|Light oil, diesel oil
|Aviation turbine kerosene
|Domestic used gas:
|Reduced rate natural gas
|Reduced rate LPG
|Light oil, diesel oil
Natural resource tax
A NOK 0.013 per kWh natural resource tax applies to hydro power activities, based on one-seventh of the produced kWh for the income year in question and the six previous years. The natural resource tax is creditable against the standard CIT.