NORWAY Law and Practice Contributed by: Bernhard Getz-Jeffreys and Johannes Wiegaard, Ro Sommernes Advokatfirma AS
Business and capital gains may, as a starting point, be offset against each other, provided that the income is taxable. Losses from personal (business) income can only be offset against other personal (business) income. Income from silent partnerships and limited partnerships may only be carried forward and offset against future income from the same partnership. 2.5 Deduction of Interest In Norway, interest deductions are limited by an inter - est limitation rule. The main rule states that net interest expenses exceeding 25% of taxable profit before interest, tax and depreciation cannot be deducted. This applies to both consolidated (group) and unincorporated enti - ties, but with different thresholds: • For group companies, the restriction applies only if the net interest expense for the Norwegian part of the group exceeds NOK25 million. • For non-group companies, the limit is NOK5 mil - lion. For group companies, the rule covers interest on loans from both related and unrelated lenders. However, an equity exemption applies: if the company can dem - onstrate that its equity ratio (of that of the Norwegian part of the group) is equal to or higher than the equity ratio of the international group, the interest deduction is granted in full, despite the limitations. For non-group companies, the limitation applies only to interest on loans from related parties. 2.6 Consolidated Tax Grouping Each corporate entity is treated as a separate tax entity with individual tax filings and tax obligations. Net income within the group can, however, be off - set against losses in other group companies through “group contributions” (Nw: konsernbidrag ). The requirements for group contributions include the following: • Companies must belong to the same group (at least 90% ownership).
• Both the contributor and recipient must be taxable in Norway, with limited exceptions under EEA law. • Contributions are deductible for the donor and tax - able for the recipient. • The transfer must be genuine and approved by the general meeting. Additionally, group companies can register jointly for VAT purposes, meaning that several group companies are considered as one entity for (most) VAT purposes and that no VAT applies to transactions between these group companies. 2.7 Capital Gains Gains from share sales are generally taxable, while losses are deductible. The gain is calculated as the sales price minus the taxable cost price plus transac - tion costs. Under the “first in, first out” principle, the first shares acquired are considered sold first. Norwegian corporations and partnerships are exempt from capital gains tax on the sale of shares or units under the exemption method, which also prevents the deduction of losses. This applies to shares and other shareholdings in Norwegian companies, as well as shareholding in companies domiciled in the EEA, pro - vided that they are genuinely established and conduct economic activity there. For companies outside the EEA, the exemption applies if they are not domiciled in a low-tax country and meet specific ownership and holding period requirements. Norway does not impose withholding tax on capital gains. 2.8 Other Taxes on Transactions Sale of VAT-liable services and goods is subject to VAT. However, the sale of ongoing businesses (busi - ness transfers) is exempt from VAT. Real estate transactions are subject to a stamp duty of 2.5% of the gross sales price. Additionally, adjustment obligations for VAT purposes may arise, potentially triggering a requirement to repay previously deducted input VAT.
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