Norway

Corporate - Significant developments

Last reviewed - 15 August 2022

Changes to the petroleum tax regime

With retroactive effect from 1 January 2022, significant changes have been introduced to the petroleum tax regime, entailing a shift to a so-called ‘sequential' tax system. The changes include, i.a., a general loss refund system replacing the exploration loss and cessation loss refund systems, changes to deductions/deprecations for investments in the upstream activity and the removal of the uplift.

Proposal for disclosure of tax arrangements is delayed

The report from the special committee to consider the implementation of reporting obligations for tax arrangements, corresponding closely to European Union (EU) Directive 2018/822/EU (DAC 6), was published on 27 June 2019. The consultation deadline was 2 December 2019. The original expectation was for a legislative decision in 2020 with effect from 2021. In light of the uncertainty surrounding the technical details of the legislation, the high implementation costs, and the recent EU reporting extension, the legislation is delayed.

New taxes within the energy sector

On 28th September 2022 the Norwegian Government announced that resource rent taxation of onshore wind power will be introduced and that the resource rent tax rate for hydro power will be increased. In addition an excise duty on electricity sold at prices exceeding 0.70 NOK/kWh (NO “høyprisbidrag”/EN high price contribution) was announced. The production fee for onshore wind power was also increased to NOK 0.02 per kWh as of 1 January 2023.

According to the proposal the resource rent tax on onshore wind power will be levied at an effective tax rate of 40% while the effective tax rate for resource rent taxable hydro power production will be 45%. The effective tax rate for onshore wind power will thus be 62% and the effective tax rate for hydro power 67%. In addition to this the high price contribution of 23% will entail a marginal tax rate of 85% and 90% for onshore wind and hydro power respectively.