All companies that are incorporated under Norwegian company law are, as a general rule, regarded as tax resident in Norway and taxable in Norway on their worldwide income. Companies incorporated under Norwegian company law that are considered tax resident in another country under an applicable tax treaty between Norway and that other country will not be treated as resident in Norway.
Foreign corporations are regarded as tax resident in Norway if the de facto management of the company is carried out in Norway. When assessing whether de facto management is carried out in Norway, one must consider where management at board level and daily management are exercised. Other circumstances concerning the organisation and the business of the company may be relevant in an overall assessment where the management functions are split and carried out in different jurisdictions.
Permanent establishment (PE)
Under 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 the Norwegian activity. 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, a sale of financial instruments can trigger taxation in Norway.
The legislation does not include 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.