Foreign tax credit
Norwegian limited liability 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.
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.
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.
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 up to 20% of incurred costs, limited up to a cost base of NOK 25 million for self-developed R&D and NOK 50 million for R&D purchased from approved institutions. 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.