New statutory general anti-avoidance rule (GAAR)
On 10 April 2019, the Norwegian Ministry of Finance published its bill proposal for a GAAR for tax purposes. When applying the GAAR, the tax authorities will re-characterize the transaction (or series of transactions) to reflect the economic reality and tax accordingly. Two criteria must be met for the GAAR to be applicable: (1) the main motive of an arrangement or transaction was to save tax; (2) based on an overall assessment of the effects of the arrangement or transaction (including the business value), the taxpayers purpose and other circumstances, it is found contrary to the objective of the tax law to base taxation on the arrangement or transaction. The new regulations entered into force 1 January 2020.
Tax advisers' duty of disclosure and confidentiality: Proposal for disclosure of tax arrangements
On June 21, 2017 a committee was appointed by the Norwegian government to investigate tax advisers' duty of disclosure and confidentiality. The report was published on June 27, 2019.
The committee has proposed the introduction of a disclosure obligation on tax arrangements for tax advisors (lawyers, accountants, auditors, banks) and clients. The proposed obligation complies with the EU Council’s directive 2018/822/EU (DAC 6) to implement recommendations in OECD/G20's Base Erosion and Profit Shifting project Action 12 on disclosure requirements for tax advisers and clients on aggressive tax planning. The proposal is adjusted to Norwegian law and applies to both domestic and cross-border tax arrangements.
Due to the professional secrecy regime for lawyers the obligation to disclosure tax arrangement will to a large extent rest with the taxpayer.
The information should be provided unsolicited. No general restrictions are imposed on tax advisers' duty of confidentiality. In the event of a breach of the duty of disclosure, a violation fee or an additional tax may be imposed.
The consultation deadline was December 2, 2019. A legislative decision in 2020 with effect from 2021 is considered likely.
Proposed amendments to the group contribution rules
On August 13, 2019 the Norwegian Ministry of Finance submitted a proposal to amend the group contribution rules. It is proposed that the rules be expanded to include group contributions to cover final losses in a foreign subsidiary resident in an EEA state. The proposal is in line with the ruling of the EFTA Court in the Yara case (September 17, 2017) and the subsequent ruling of the Norwegian Supreme Court (January 28, 2019). The proposal provides greater predictability for Norwegian groups that are expanding their operations to other EEA countries and are at a loss and wish to liquidate their investment in the foreign subsidiary. The Norwegian parent company must, however, be prepared for extensive documentation requirements to be able to ascertain that there is a final loss in the foreign subsidiary.
Tax incentive scheme for R&D expenses
As of 2020, there are some changes to the Norwegian research and development (R&D) tax credit scheme (SkatteFunn). This mainly includes:
- The maximum hourly chargeable rate for own employees and employees of related parties has been increased from NOK 600 to NOK 700.
- The upper annual limit for expenses related to purchase of R&D services from third parties has been reduced from NOK 50m to NOK 25m, i.e. to be the same limit as for internal R&D. The requirement that the entity is an accredited and preapproved research institution is removed.
- 19% the R&D expenses are deductible. The new rate applies to all types of businesses