NORWAY Trends and Developments Contributed by: Sicilie Tveøy, Thomas Alnæs, Ramborg Elvebakk and Karen Margrethe Bugge, Advokatfirmaet Hjort AS
Capital gains tax for individuals is in general 22%. However, there is an exemption for dividend and gains on shares where the tax rate is 37.84% (2025). The benefit of these relatively high taxes is access to extensive public services, including free healthcare. For example, if a person is injured while enjoying out - door activities such as hiking or skiing, medical treat - ment is provided at no additional cost. This reflects the fundamental trade-off in the Norwegian system: higher taxes in exchange for comprehensive social welfare and public services. Corporate tax Norwegian corporations pay a flat 22% corporate tax on their profits. This rate has been stable in recent years. The Norwegian tax exemption method causes private limited companies’ share dividends and share gains from investments in other private limited companies to be exempt from tax (and losses on the sale of shares are not deductible). Retained earnings (profits rein - vested or held in the company) are taxed only at the corporate level, and there is no extra tax until profits are distributed to individual owners. That is the reason for structuring companies in holdings and subsidiaries in Norway – it is tax efficient. Tax on distributions to individuals When a company pays dividends to a shareholder, those dividends are taxed as capital gains. However, Norway uses a gross-up and tax method for dividends (in 2025, the gross-up factor is 1.72%). • For 2025, the effective tax on dividends to a per - sonal shareholder is 37.84% (22 x 1.72). • In simpler terms, after a company has paid 22% corporate tax on its operating profits, any distribu - tion to an individual will be taxed with an additional 37.84%. • The combined effective tax on operating income distributed personally is 51.51%. As an entrepreneur in Norway, a person can withdraw money from their company as salary or dividend. Sal - ary payments reduce the company’s taxable profit, lowering corporate tax, but are subject to full payroll
taxes and up to 47.4% personal tax. Dividends, on the other hand, are not deductible, are paid from operat - ing profits subject to 22% corporate tax, and are then taxed at 37.84% at the personal level. Many owners use a combination of moderate salary and dividends to optimise their overall tax burden, but the difference in total tax paid is often small. It is recommended to consult a tax adviser to determine the most effective approach for a given situation. In addition, it is impor - tant to be aware of two other taxes. • VAT – Norway has a general 25% value added tax (with exemptions and reduced levels) on most sales, which a business must collect if applicable. • Wealth tax – Norway imposes a net wealth tax on individuals each year (around 0.85% on net assets above certain thresholds). Company-Owned Assets: Tax on Personal Use Foreigners may for different reasons consider pur - chasing homes, cabins, cars or boats in Norway through a company. However, this approach does not align with Norwegian tax rules. The Norwegian tax authorities take a strict stance on what they call “private consumption in company”. If a company owns an asset that is available for the private use of a shareholder or related party, the authorities will treat the value of that benefit as taxable income for the individual, even if no money is with - drawn from the company. Even occasional or potential private use can trigger significant tax liabilities, often calculated based on the asset’s market rental value or a deemed benefit. This policy is intended to prevent shareholders from avoiding personal income tax by enjoying private benefits through corporate structures. As a result, using a company to own personal assets in Norway can lead to heavy taxation and is gener - ally not recommended. From a tax perspective, if one wishes to follow Norwegian customs and buy a mountain cabin for hiking and skiing, purchasing it as an individual rather than through a company is rec - ommended to avoid unintended tax consequences. Additionally, it should be kept in mind that every prop - erty purchase in Norway is subject to a documen - tary stamp tax of 2.5% of the purchase price, pay - able each time real estate is acquired. Therefore, it is
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