Foreign Account Tax Compliance Act (FATCA) agreement with the United States
In April 2013, Norway entered into an FATCA agreement with the United States. The agreement is based on the US FATCA regulations and is the basis for information exchange between the Norwegian and US tax authorities with regards to financial transactions.
According to the agreement, Norwegian financial institutions can report to the Norwegian authorities instead of reporting to the US authorities. It is expected that this will ease the reporting liabilities for Norwegian financial institutions.
Common Reporting Standard (CRS) regime
Norway has also entered into agreements with other countries concerning the automatic exchange of information relating to financial accounts in order to prevent tax evasion and international tax crime. Under the agreements, the Norwegian tax authorities will receive information from foreign financial institutions and tax authorities regarding persons liable to tax to Norway.
In addition, financial institutions are liable to report certain financial information about their clients, accounts, etc. to the Norwegian Tax Administration, which will forward the information to the relevant foreign tax authorities.
Base Erosion and Profit Shifting (BEPS)
Norway continues its support to the BEPS project and seeks to be an active contributor to implement measures that facilitate its objectives of preventing base erosion and profit shifting. Norway has, over the last few years, adopted regulations for, among others, tax treatment of hybrid instruments, interest limitation rules, transfer pricing regulations and CbC reporting, and the MLI as a result of the BEPS action points.
Multilateral Instrument (MLI)
On 7 June 2017, Norway signed the MLI, and the preliminary Norwegian MLI positions were published 6 July 2017. Norway included 28 treaties to be Covered Tax Agreements (CTAs). The government approved the MLI on 16 November 2018, and the Parliament adopted the Convention on 19 February 2019. The Convention has been ratified and the ratification documents have been deposited.
Norway included 28 treaties to be covered tax agreements and, in addition, several other treaties are under negotiation. Of the 28 treaties, there are only 8 with a match on the minimum standards. As of 1 January 2021, the MLI is in force for 17 countries: Australia, Georgia, India, Ireland, Japan, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Russia, Serbia, Slovenia, and Great Britain and Northern Ireland.
These entererdy into force for the treaty parties as follows:
- For WHTs: 1 January 2020.
- For other taxes: 1 January 2021. For five countries, the conditions for reduced WHT on dividends were changed from 1 January 2020 (Australia, Ireland, Netherlands, Serbia, and Slovenia).
Several other treaties are being re-negotiated. In 2019, Norway signed a protocol with Switzerland, and the new protocol to the Nordic tax treaty is in force from 28 November 2019.
For its agreements listed under the MLI, Norway is implementing the preamble statement (Article 6 of the MLI) and the Principal Purposes Test (PPT, Article 7 of the MLI). Norway has adopted the PPT to counter abuse of tax treaties. According to the test, a taxpayer may not assert treaty benefits if one of the primary purposes of a transaction or arrangement is to exploit benefits under the treaty.