NORWAY Law and Practice Contributed by: Thea Slethaug, Axel Bjørke, Sigbjørn Sørensen and Jarand Aarhus, Aider Legal
in the case of dividends paid between parent and subsidiary companies. No withholding tax applies to dividends paid to corporate shareholders quali - fying under the participation exemption (EEA-resi - dent companies satisfying anti-abuse conditions). Interest Norway does not currently levy a general withholding tax on interest paid to non-residents under domes - tic law, though thin capitalisation and transfer pricing rules may affect the deductibility of interest on related- party loans. Royalties Norway introduced a withholding tax on royalties and certain lease payments (for IP and certain assets) paid to related parties in low-tax jurisdictions, effective from 2021. The rate is 15%. Tax treaties may reduce this rate. 3.4 Capital Gains Residents Capital gains are included in ordinary income and taxed at 22% for companies and at an effective rate of 37.8% for individual shareholders on gains from shares. Gains from sales of other assets (e.g., real property) are taxed at 22%. Non-Residents Non-residents are generally not subject to Norwegian capital gains tax on the disposal of shares in Norwe - gian companies unless the gain is attributable to a Norwegian PE. However, gains on immovable prop - erty located in Norway are taxable in Norway. Exit Taxation Norway has exit tax rules for individuals who emigrate. Unrealised gains on shares and other assets are sub - ject to tax upon emigration, though payment may be deferred under certain conditions (including under EU/EEA law requirements). Following recent legisla - tive changes, the exit tax rules have been significantly tightened. 3.5 Employment Income General Taxation Employment income earned by residents is subject to income tax and social security contributions. The
combined marginal tax rate on employment income can reach approximately 47.4% for the highest income brackets. Short-Term Assignments and Cross-Border Employment • Non-residents working in Norway are taxed on income for work performed in Norway, subject to treaty relief. • Norway has the PAYE scheme for foreign employ - ees, offering a simplified flat-rate option. • The 183-day rule in most Norwegian tax treaties means that employees on short-term assignments may be exempt from Norwegian tax if they are present in Norway for no more than 183 days in a 12-month period and their remuneration is paid by a non-Norwegian employer without a Norwegian PE. Remote Working Norway has not enacted specific legislation exclu - sively addressing remote working by cross-border employees. However, existing PE and employment income rules apply. There is growing awareness of the risk that remote work may create a PE for a foreign employer in Norway if a home office is used regularly and habitually for the employer’s business. The Tax Administration has provided some guidance on this issue, and it remains a developing area. Norway has a special petroleum tax regime for com - panies engaged in oil and gas exploration and pro - duction on the Norwegian continental shelf. The ordi - nary corporate tax rate of 22% applies, plus a special petroleum surtax of 56%, resulting in a combined marginal tax rate of 78%. Generous uplift and invest - ment deduction rules apply to mitigate the burden. Shipping Income 3.6 Other Income Petroleum Income Qualifying Norwegian shipping companies may elect to participate in a tonnage tax regime, under which shipping profits are effectively exempt from ordinary corporate income tax. Instead, a small annual ton - nage-based tax applies. This is a significant deviation from the OECD Model approach, which does not spe - cifically address preferential shipping regimes.
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