NORWAY Trends and Developments Contributed by: Thea Slethaug, Axel Bjørke, Sigbjørn Sørensen and Jarand Aarhus, Aider Legal
Aider Legal Lars Hilles gate 30, 5008 Bergen, Norway Tel: +47 55 29 99 00 Email: Contact.legal@aider.no Web: aiderlegal.com
Norway as a Destination for International Project Investment: Tax and Compliance Considerations for International Businesses With a stable regulatory framework, Norway is an attractive destination for international companies seeking large-scale project work. The country’s gov - ernment has both the political will and the financial capacity to invest heavily in infrastructure, energy and digital development. Public procurement alone is estimated to exceed NOK600 billion annually, and a significant proportion of this work is subcontracted – either entirely or in part – creating genuine oppor - tunities for foreign specialists across a wide range of disciplines. The sectors driving this investment are varied and substantial. Norway’s ambition to upgrade its electric - ity grid, develop onshore and offshore wind capacity, expand its hydropower infrastructure and build data centre capacity – underpinned by an abundant supply of competitively priced renewable energy – generates a long-term pipeline of technically complex projects. Norway’s road network, railway system, tunnels and public buildings similarly require constant investment and periodic major renewal, service and maintenance. For foreign companies with relevant expertise, the commercial case for pursuing Norwegian project work is compelling. What makes Norway distinctive from an international tax perspective, however, is the complexity of the framework that applies to foreign companies and their employees once they begin working here. Norway has entered tax treaties with approximately 90 countries, and these treaties are the starting point for any analy - sis of a foreign company’s Norwegian tax position.
The applicable treaty, the nature of the contract, the duration of the project and the residence of both the employer and the individual employees will all deter - mine what tax obligations arise – and the outcomes can differ substantially depending on these factors. Getting this analysis right before committing to a pro - ject is not optional. It is a commercial necessity. Tax Treaties as the Foundation of the Analysis Under Norway’s domestic tax rules all foreign enter - prises conducting business activities in Norway are in principle subject to Norwegian corporate tax at the current rate of 22%. However, where a relevant tax treaty exists, that treaty takes precedence and may provide full or partial relief from Norwegian corporate tax liability. The general rule in a tax treaty is that a foreign enter - prise becomes subject to Norwegian corporate tax only if it has a permanent establishment in Norway. If no permanent establishment exists, the foreign company’s profits from its Norwegian activities are in principle taxable only in its home country. This makes the permanent establishment question central to tax planning for projects in Norway. Norway’s approximately 90 tax treaties are not uni - form. While they follow the OECD Model Tax Conven - tion in broad terms, the specific thresholds, definitions and carve-outs vary from one treaty to another. An assessment of tax liability must therefore be made specifically for each foreign enterprise, considering the precise terms of the treaty between Norway and the company’s country of residence. A company that assumes its position is identical to that of a competitor
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