Norway

Foreign tax credit

Norwegian limited companies that have paid taxes on foreign-source income may, under certain conditions, offset the Norwegian tax paid against the foreign tax paid. The tax credit is limited to the lower of the Norwegian tax paid on the same type of foreign income and the foreign tax actually paid. It is possible to carry forward unused foreign taxes for five years. A credit claimed in accordance with the regulations stated above may not be used in addition to deductions pursuant to other rules and regulations. These rules are very technical, and it should be noted that there are two different 'baskets' of income.

Roll-over regulations

Upon application, the Ministry of Finance has the authority to grant tax relief on the transfer of assets within a group. The transfer may be carried out between group companies (more than 90% ownership and voting rights) or partnerships (with mainly the same owners). If a tax relief is granted, the transfer would not trigger any taxation at the time of the transfer, but all tax positions, including the tax basis of the transferred assets, will be transferred to the acquiring company. A condition for the tax relief is normally that the companies remain within the group. In the event of a tax-free transfer of assets within the group, the receiving company must provide security for tax that may be levied on gains upon subsequent realisation of the assets. The requirement for security and its duration is determined by the tax office in each individual case.

The Ministry of Finance also has the authority to grant tax relief on the realisation of property, business, shares, etc. during a reorganisation. The reorganisation must improve the efficiency of the business to qualify for tax relief, and, accordingly, administrative effects would not be sufficient. The tax relief must also help companies to carry out the reorganisation. In addition, the tax relief must not reduce the Norwegian tax base; the tax positions would be transferred to the new taxpayer.

The Norwegian government has enacted tax exemptions for specific transactions, effective from the income year 2023. These exemptions pertain to tax-free cross-border mergers for UCITS funds and the tax-free merging and splitting of savings banks, including the establishment of savings bank foundations. Additionally, the legislation adjusts tax rules for merger and demerger schemes related to triangular mergers and demergers, setting the tax input value equal to the receivables nominal value, typically resulting in no gain or loss during conversion.

SkatteFUNN research and development (R&D) tax incentive scheme

The SkatteFUNN R&D tax incentive scheme is a government program that is designed to stimulate R&D in Norwegian trade and industry. Businesses and enterprises that are subject to taxation in Norway are eligible to apply for tax relief.

All Norwegian companies and branches with R&D projects can apply for a deduction of 19% of incurred costs, limited up to a cost base of NOK 25 million annually. If the company does not have taxable income for the income year in question, the company will receive a cash refund for the year following the income year.

The main criterion for applying for SkatteFUNN is that the company has an R&D project with the aim of developing a new or improved asset, service, or production process. There are no requirements regarding type of business. A distinction is made against ordinary product development without developing new knowledge, functions, etc., the ordinary day-to-day business operations, etc.

The application for SkatteFUNN must be approved by Norges Forskningsråd (The Research Council of Norway) and is awarded for a period of a maximum of three years. If the application is approved, there is a requirement to submit a form attested by the company's auditor, together with the ordinary tax return, in order to obtain the tax incentive.