NORWAY Law and Practice Contributed by: Thea Slethaug, Axel Bjørke, Sigbjørn Sørensen and Jarand Aarhus, Aider Legal
serves as the starting point for most of Norway’s bilat - eral tax treaties. 1.4 Multilateral Instrument Norway ratified the Multilateral Instrument (MLI), which entered into force for Norway on 1 November 2019.
Please also note that Norwegian tax residence does not automatically end upon departure from Norway. An individual who emigrates must meet specific conditions, including (i) not using a dwelling in Nor - way and (ii) not exceeding 61 days in Norway in any income year during the emigration period. The required duration of the period abroad depends on the length of the individual’s prior residence in Nor - way: • For individuals who have been tax resident in Norway for less than ten years prior to the year of emigration, tax residence ceases at the end of the first income year in which both conditions (i) and (ii) above are met. • For individuals who have been tax resident in Norway for ten years or more prior to the year of emigration, tax residence does not cease until the expiry of the third income year following the year of departure, provided that both conditions (i) and (ii) above are satisfied for each of those three income years. 2.3 Taxation of Resident Individuals Tax residents in Norway are, according to the Tax Act, subject to tax on their worldwide income, includ - ing employment income, business income, capital income and gains. Norway also imposes a net wealth tax on resident individuals. However, the starting point might be moderated due to applicable tax treaties. 2.4 Taxation of Non-Resident Individuals The starting point when it comes to taxation of non- residents is that they are taxed only on income with a Norwegian source and on wealth located in Nor - way such as properties and bank accounts. Note that an obligation to report the income and wealth is a requirement even if it is not taxable to Norway. The main categories of Norwegian-source income subject to taxation include: • employment income earned in Norway; • business income attributable to a PE in Norway; • income from immovable property located in Nor - way; and
2. Territoriality, Residence and Permanent Establishment
2.1 General Principle of Territorial Taxation Norway employs a residence-based system of taxa - tion. Tax residents of Norway are subject to tax on their worldwide income and wealth. Non-residents are taxed only on income and wealth sourced in Norway. Svalbard has a special tax regime with lower tax rates and its own tax rules. Jan Mayen and the Norwegian dependencies are generally treated as part of Norway for tax purposes, but specific rules may apply. The Norwegian continental shelf is not part of Norway’s tax jurisdiction as defined in the Tax Act, which extends only to Norwegian territorial waters (12 nautical miles). However, activities on the continental shelf are sub - ject to Norwegian taxation through separate legisla - tion – most notably the Petroleum Tax Act of 1975 ( petroleumsskatteloven ), which governs the taxation of oil and gas exploration and production. For non- residents, tax liability for activities on the continental shelf is specifically provided for in the Tax Act. Com - panies engaged in petroleum activities on the shelf are An individual becomes a tax resident of Norway under the Tax Act if they are considered domiciled ( bosatt ) in Norway. The key criteria are: • Physical presence: An individual who stays in Norway for more than 183 days in any 12-month period, or more than 270 days over a 36-month period, is considered resident. • Domicile: An individual who has established a permanent home in Norway is generally treated as resident, regardless of the number of days spent. subject to special petroleum taxation. 2.2 Tax Residence of Individuals
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