NORWAY Law and Practice Contributed by: Ida Marie Windrup, Kristine Hjertenæs, Markus Nilssen and Daniel Jovanovic, BAHR
8.2 Withholding Tax/Qualifying Lender Concepts Norway levies a withholding tax (15% rate) on certain outbound interest payments made from Norwegian debtors to related parties resident in low-tax jurisdictions (namely where the effective taxation is lower than two-thirds of what it would have been had the foreign entity (lender) been resident in Norway). There is a general exemp- tion for lenders that are genuinely established and carry out genuine economic activity within the EEA and fulfil certain documentation require- ments. There is currently no proposal for with- holding taxes being imposed on interest pay- ments made to non-related (third-party) lenders like banks. 8.3 Thin-Capitalisation Rules In Norway, the standard tax regime does not include specific thin-capitalisation rules. Nonetheless, interest payments on loans from or provided by related parties may not be deduct- ible if they exceed the debtor’s arm’s length borrowing capacity, as per transfer pricing regulations and, in certain cases, general anti- avoidance rules. However, there are limitations on the level of interest costs that are allowed for tax deduction in Norway, specifically, restricting deductions to 25% of the EBITDA (earnings before inter- est, taxes, depreciation and amortisation) of the Norwegian entities. For group companies, the limitation of tax deduction applies to debts owed to both related and non-related parties (ie, banks and bondholders). The limitation does not apply if the Norwegian company’s or Norwegian group’s equity-to-total- assets ratio, as reported in the consolidated financial statements, is equal to or higher than
tees and security being deemed void; see 5.5 Financial Assistance . The “Objective” and “Subjective” Rules In Norway, the rules pertaining to claw-back are divided into two primary categories. The first encompasses objective claw-back rules that are applied irrespective of the parties’ intentions with the transaction. This means that the estab- lishment of for instance “fraudulent element” is not required. Examples include transactions that unjustly give preferential treatment to certain creditors at the expense of others, prevent the debtor’s assets from being used to pay off the creditors, or increase the debtor’s liabilities in a manner detrimental to the creditors. Should the transaction be covered by the objective rules, the reversal of claims will apply for transactions carried out in a period of three months leading up to the Bankruptcy Date (or up to two years for closely related parties). The second category is subjective claw-back rules, which come into play under circumstanc- es including intentional wrongdoing, fraudulent activity or similar. In cases where the creditor should have been aware of the upcoming insol- vency and the improper nature of the transac- tion, a statute of limitations of ten years applies. While claw-back regulations can be invoked in a multitude of scenarios, detailing these instances is beyond the scope of this submission. 8. Tax Issues 8.1 Stamp Taxes There are no stamp taxes applicable in Norway.
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