NORWAY Law and Practice Contributed by: Bernhard Getz-Jeffreys and Johannes Wiegaard, Ro Sommernes Advokatfirma AS
2.9 Other Notable Taxes The most significant tax item compared to other countries is the Norwegian resource rent tax, which is a special tax levied on income derived from natural resources, including oil production, electricity genera - tion, and the fishing and seafood industries. 3. Corporations and Non-Corporate Businesses 3.1 Form of Closely Held Local Businesses Most local closely held companies are limited compa - nies with limited liability for shareholders, but some, particularly in the agriculture and consultancy sectors, operate as sole proprietorships. 3.2 Individual and Corporate Rates Norwegian tax rules are based on the principle of real - ity over form. This means that taxation takes place based on realities and not formalities. An income shall be allocated to the subject that has earned the income and classified on the basis of the nature of the income and taxed thereafter (as capital gains/business profits, etc). Furthermore, there are strict limitations on private indi - viduals’ access to a company’s assets and properties outside the company’s ordinary activities. Violations of these rules can be sanctioned under criminal law. 3.3 Restrictions on Retention of Earnings by Closely Held Corporations In Norwegian tax law, there are no specific rules that directly prevent limited companies from accumulating profits. The exemption model is designed to facilitate the reinvestment of profits in new businesses without tax in addition to ordinary profit tax. For shareholders that participate actively in the busi - ness, capital gains may be reclassified to salary income/personal income for tax purposes. 3.4 Taxation of Individuals on Shares in Closely Held Corporations In Norway, individuals are taxed on dividends and capital gains from the sale of shares according to the shareholder model. The effective tax rate on share
gains and dividends is currently 37.84%, less accu - mulated shielding on the shares. The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a risk-free interest rate based on the effective rate of interest on treasury bills (Nw: statskasseveksler ) with three months’ maturi - ty plus 0.5 percentage points, after tax. The allowance is calculated for each calendar year and is allocated solely to shareholders at the expiration of the relevant calendar year. The risk-free interest rate for 2025 was 3.6%. 3.5 Taxation of Individuals on Shares in Public Corporations The taxation of dividends and capital gains for individ - uals investing in publicly traded corporations follows the same principles as for private corporations. Note, however, that different documentation requirements apply to obtain withholding tax relief. 4. Taxation of Inbound Investments 4.1 Application of Withholding Taxes In Norway, a 25% withholding tax applies to divi - dends paid to foreign shareholders, though it may be reduced under tax treaties. EEA-domiciled companies are exempt if they are genuinely established and oper - ate in the EEA, while non-EEA companies may qualify under specific ownership criteria. Interest and royalties paid to affiliates in low-tax juris - dictions outside the EEA are subject to a 15% with - holding tax, while payments to non-low-tax jurisdic - tions are not taxed. Norwegian tax authorities have increased oversight of cross-border transactions involving these payments. 4.2 Key Treaty Jurisdictions for Inbound Investment Norway has established tax treaties with over 90 countries to prevent double taxation and foster inter - national investment. These agreements are largely based on the OECD Model Tax Convention and influ - ence the taxation of investments in Norwegian com - panies, including shares and debt instruments.
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