NORWAY Law and Practice Contributed by: Daniel Nygaard Nyberg, Karoline Ulleland Hoel, Ole Andenæs and Jens Fredrik Bøen, Wikborg Rein Advokatfirma AS
the EU/EEA and some types of investments outside of the EU/EEA, subject to certain limitations). This is due to the Norwegian participation exemption ( fritaks- metoden ). Dividend distributions from corporate funds to foreign investors are subject to up to 25% withholding tax, but EU/EEA-based corporate investors are largely exempt, and tax treaties may provide relief. Addition - ally, repayment of paid-in capital may be distributed tax-free before taxable dividends. AIF – Limited Partnership AIFs established as limited partnerships in Norway are tax transparent for Norwegian tax purposes. They therefore trigger Norwegian tax and reporting obliga - tions for the limited partners (investors), which is why they are not the preferred choice of foreign investors. However, investors will be largely tax exempt on the underlying dividends and gains from qualifying share investment (they benefit from the Norwegian partici - pation exemption through the partnership). There is typically no Norwegian withholding tax on distributions to or from Norwegian limited partner - ships, which often makes this type of AIF more tax effective than limited company structures. 2.5 Loan Origination Norwegian legislation has strict rules on which entities may originate loans, and the regulatory regime is often referred to as a credit monopoly. While the upcom - ing implementation of the AIFMD II will introduce a broad range of new opportunities for loan origination activities by, among other things, allowing direct lend - ing funds access to Norwegian markets (as further detailed under “Future exemptions” in this section), existing Norwegian legislation still imposes strict limi - tations regarding which entities may undertake loan- originating activities. As a starting point, lending and other forms of financ - ing by extension of credit, as well as the intermedia - tion and facilitation of such activities, are defined as “financing activities” under Norwegian law and can only be carried out by institutions duly licensed in Nor - way or EEA-based credit or financial institutions that
have the benefit of EEA “passporting rights”, unless an exemption applies. Financing activities cover both the provision of credit in the primary market (loan origination) and the acqui - sition of loans in the secondary market. On the other hand, investments in bonds (whether on the primary or secondary market) are generally held not to constitute financing activities. Similarly, operational leasing, as opposed to financial leasing, and investments chan - nelled through structured equity also do not generally fall within the ambit of licensable financing activities. General Exemptions to Financing Activities Additionally, there are certain general exemptions to what constitutes a financing activity. Exemptions for regulated fund structures Although there is no general exemption under the AIFM Act for unregulated AIFs, certain regulated fund structures, notably EuSEFs, EuVECAs and ELTIFs, have the benefit of originating loans to eligible bor - rowers under each regime. This represents an exemp - tion from the credit monopoly referred to above. The exemption only applies if the funds are able to com - ply with the investment conditions as imposed by the regulations. Future exemptions AIFMD II introduces a new regulatory framework for credit funds, which will enable further AIFs to offer financing activities in Norway. Among the most significant changes in the revised directive is the introduction of so-called “loan-origi - nating AIFs”, broadly encompassing AIFs that origi - nate loans as their main activity. New requirements will apply to AIFMs that manage loan-originating AIFs. Moreover, new rules will also apply to AIFMs that manage any AIF that “originates a loan”, even if loan origination is not the AIF’s main activity. AIFMD II came into force on 15 April 2024, with member states required to transpose the directive by 16 April 2026. The FSAN is currently working on proposals to transpose the AIFMD II into Norwegian law. However, there is still no certainty that Norway will meet this transposition deadline, and national authorities have
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