Norway Tax Guide 2013

Transcription

1 Norway Tax Guide 2013

2 FOREWORD A country s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Foreword Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for over 90 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Richard Sackin Chairman, PKF International Tax Committee Eisner Amper LLP richard.sackin@eisneramper.com I

3 IMPORTANT DISCLAIMER Disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II

4 PREFACE The (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2013, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Preface In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at PKF INTERNATIONAL LIMITED MAY 2013 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION III

5 ABOUT PKF INTERNATIONAL LIMITED PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,270 partners and more than 22,000 staff. PKFI is the 11th largest global accountancy network and its member firms have $2.68 billion aggregate fee income (year end June 2012). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide. Services provided by member firms include: Introduction Assurance & Advisory Insolvency Corporate & Personal Financial Planning/Wealth management Taxation Corporate Finance Forensic Accounting Management Consultancy Hotel Consultancy IT Consultancy PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network. Please visit for more information. IV

6 STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES B. DETERMINATION OF TAXABLE INCOME CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES Structure C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROL H. PERSONAL TAX I. TREATY AND NON-TREATY WITHHOLDING TAX RATES V

7 INTERNATIONAL TIME ZONES Time Zones AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME ELSEWHERE IS: A Algeria pm Angola pm Argentina am Australia - Melbourne pm Sydney pm Adelaide pm Perth pm Austria pm B Bahamas am Bahrain pm Belgium pm Belize am Bermuda am Brazil am British Virgin Islands am Guernsey noon Guyana am H Hong Kong pm Hungary pm I India pm Indonesia pm Ireland noon Isle of Man noon Israel pm Italy pm J Jamaica am Japan pm Jordan pm C Canada - Toronto am Winnipeg am Calgary am Vancouver am Cayman Islands am Chile am China - Beijing pm Colombia am Cyprus pm Czech Republic pm D Denmark pm Dominican Republic am E Ecuador am Egypt pm El Salvador am Estonia pm F Fiji midnight Finland pm France pm G Gambia (The) noon Germany pm Ghana noon Greece pm Grenada am Guatemala am VI K Kenya pm L Latvia pm Lebanon pm Luxembourg pm M Malaysia pm Malta pm Mexico am Morocco noon N Namibia pm Netherlands (The) pm New Zealand midnight Nigeria pm Norway pm O Oman pm P Panama am Papua New Guinea pm Peru am Philippines pm Poland pm Portugal pm Q Qatar am R Romania pm

8 Russia - Moscow pm St Petersburg pm S Singapore pm Slovak Republic pm Slovenia pm South Africa pm Spain pm Sweden pm Switzerland pm T Taiwan pm Thailand pm Tunisia noon Turkey pm Turks and Caicos Islands am U Uganda pm Ukraine pm United Arab Emirates pm United Kingdom (GMT) 12 noon United States of America - New York City am Washington, D.C am Chicago am Houston am Denver am Los Angeles am San Francisco am Uruguay am Time Zones V Venezuela am Z Zimbabwe pm VII

9 Norway NORWAY Currency: Kroner Dial Code To: 47 Dial Code Out: 00 (NOK) Please EMEI Regional Director, Oliver Grosse-Brauckmann at for tax contact. A. TAXES PAYABLE COMPANY TAX Company tax is payable by Norwegian resident companies on non-exempt income derived from all sources. Non-resident companies are required to pay tax on income sourced in Norway. A company is treated as resident if its central management and control or head office is located in Norway and, for all practical purposes, a company registered in Norway is also considered a resident. The company tax rate on income is 28%. The tax year is usually the calendar year, although this can be deviated from in certain circumstances. Tax is payable in three instalments. A preliminary assessment is issued after the end of the tax year corresponding to the accrued taxes not yet assessed. This tax is due in two instalments on 15 February and 15 April. The balance is to be paid before 1 May. Company tax returns must be filed by the end of March for the preceding tax year (this is extended to the end of May for electronically filed returns). It is possible to get an agreed postponement. CAPITAL GAINS TAX There is no separate capital gains tax. Capital gains are treated as ordinary income and capital losses are treated in the same way as trading losses. However, gains on the disposal of shares of resident companies are exempt from tax (and losses on such disposals are not deductible). BRANCH PROFITS TAX There is no separate branch profits tax in Norway. Non-resident companies carrying on a business in Norway are taxed on the profits of that business in the same way as resident companies. SALES TAX/VALUE ADDED TAX (VAT) VAT is levied on the sale of most merchandise and services and on imported goods and services. The VAT rate is 25% (15 % on food, 8% on passenger transport, broadcasting, cinema tickets, sports events, leisure parks and experience centre tickets and letting of rooms in hotels, motels and tourist cabins etc). Some goods are exempt but VAT on the purchase of materials and goods is still deductible for these businesses. This also applies to exports, newspapers, certain periodicals and international transportation. Other areas are exempt without any credit for input tax. This is the case for health services and financial services. FRINGE BENEFITS TAX (FBT) Both residents and non-residents are taxed on fringe benefits. The value of the benefits is taxed as the top slice of employment income. The highest marginal tax rate is 51%. SOCIAL SECURITY CONTRIBUTIONS Employers are liable to pay social security contributions relating to salaries and benefits paid to their employees. The fee levied is 14.1% in Central areas. Lower rates are available for certain employees in areas in the North of Norway. LOCAL TAXES Property taxes in some urban areas are levied at a maximum 0.7 % of the tax value of the property. OTHER TAXES Real estate transactions are subject to 2.5% stamp duty. B. DETERMINATION OF TAXABLE INCOME The taxable income of a company is determined by ascertaining assessable income and then subtracting all allowable deductions. Generally, to be deductible, losses and expenses must relate to producing the assessable income. Some items such as entertainment expenses and gifts are specifically non-deductible. Only realised expenses are deductible. Special rules apply to the categories listed below. 1

10 Norway DEPRECIATION Book depreciation is not allowable for tax purposes. Assets with an expected life of more than three years and costing more than NOK15,000 should be depreciated on a declining-balance method using the following rates: Office machinery 30 Goodwill 20 Trucks, trailers, buses, taxis and vehicles for disabled persons 20 Cars, agricultural tractors, machinery, tools, instruments etc. 20 Ships, drilling platforms, vessels, etc. 14 Aeroplanes 12 Power stations, power lines 5 Industrial buildings, hotels, restaurants 4 Office buildings 2 Technical installations in buildings 10 Rate (%) STOCK/INVENTORY All trading stock held at the beginning of the tax year and at the end of the tax year must be taken into account when determining taxable income. Stock is valued at cost without regard to real value. Work in progress and finished products are valued at direct variable cost of materials and labour. Real value is not taken into account. Accepted valuation method is FIFO not average cost or LIFO. CAPITAL GAINS AND LOSSES See text above. DIVIDENDS Dividends are not deductible for income tax purposes for the dividend paying company. Dividends received from other Norwegian companies are tax-exempt under the participation exemption. However, 3% of the dividend is added to the recipient s taxable income unless it holds more than 90% of the shares and voting power in the company paying the dividend. INTEREST DEDUCTIONS All interest costs on business debt are deductible. Normally, there are no thin capitalisation limitations (except in oil and gas production). Tax authorities can, however, make adjustments. LOSSES Losses may be carried forward. Losses may generally not be carried back but, when a company liquidates, the losses of the year of liquidation may be offset against profits of the two preceding years. FOREIGN SOURCED INCOME Norway has rules designed to ensure that profits sourced in low tax countries are included in the controlling Norwegian company s taxable income. Generally, income from a foreign company will be included if 50% or more of the company is owned or controlled by Norwegians. A low tax jurisdiction applies where the tax payable is less than two-thirds of the tax that would have been payable in Norway. INCENTIVES Generally, there are no special incentives, although research and development credits are granted to small and medium sized companies under qualifying circumstances. C. FOREIGN TAX RELIEF Deductions are available for foreign tax paid or, as an alternative, a credit may be available against Norwegian tax payable on that income. D. CORPORATE GROUPS Group companies cannot file consolidated tax returns. Under special circumstances, income can be transferred between companies residing in Norway. The requirement is that there is more than 90% common ownership of the companies. 2

11 Norway E. RELATED PARTY TRANSACTIONS Transfer pricing should be based on an arm s length principle. Norwegian tax law gives the tax authorities the power to raise assessments if transactions between the taxpayer and associated companies are not based on an arm s length principle. F. WITHHOLDING TAX Withholding taxes must be deducted from dividends paid to non-residents at a rate of 25%, although there is no withholding on dividends paid to corporate shareholders resident in and performing real economic activities in the EEA. Interest payments and royalties are not subject to withholding taxes. G. EXCHANGE CONTROLS Most exchange controls were phased out in However, all imports of capital in cash exceeding NOK 25,000 should be reported to the Bank of Norway. Other transfers of capital need not be reported. H. PERSONAL TAX Income tax is payable by Norwegian residents on income derived from all sources. Non-residents are only required to pay tax on Norwegian-sourced income. Residency is determined by domicile or where the individual has spent, or intends to spend, more than six months of the tax year. Under almost all Norwegian tax treaties, foreign-earned income is exempt from Norwegian tax. Where there is no treaty, credit for foreign taxes is given up to the amount of Norwegian tax on foreign income. Income tax is payable on assessable income less allowable deductions. Assessable income includes business income, employment income, certain capital gains, rent and interest income. Some expenses incurred in earning the assessable income are deductible. Some actual expenses can be replaced by standard deductions. The general combined rate of the national and municipal income taxes is 28%. A lower rate of 24.5% applies for the counties of Finnmark and Nord-Troms. A personal allowance of NOK 94,300 is available to jointly assessed married couples and for single persons with dependents. The allowance for single persons without dependents and married persons assessed separately is NOK 47,150. OTHER TAXATION All income from capital is taxable at 28%. However, the value of dividends chargeable to tax is reduced by an amount representative of a risk-free return on the invested capital. This amount was 1.5% for the 2012 tax year. An additional national income tax is payable on gross personal income (which includes gross income from employment or self-employment, including pensions). With effect from 1 January 2013 the rates of the national income tax are: Taxable income (NOK) Rate (%) Classes 1 and 2: 0 509, , , ,300 and above 12 In addition, social security taxes are paid. Employees pay 7.8% of gross salary income. For self-employed individuals the rate is 11%. Wealth tax is charged on the net value of assets. The rates are progressive from 0% to 1.1% including national and municipal net wealth taxes. Property transferred by gift or on death is taxable at rates varying from 6% to 15%. 3

12 Norway I. TREATY AND NON-TREATY WITHHOLDING TAX RATES ON DIVIDENDS FROM NORWAY Ordinary rates Parent/ subsidiary Non-Tax Treaty Countries: Treaty Countries: Albania 15 5 Argentina Australia Austria 15 0 Azerbaijan Republic (1) Parent/subsidiary rate requirements 30% capital participation and an investment of at least $100,000 Bangladesh % capital participation Barbados % capital participation Belgium 15 5 Benin Brazil Domestic rate applies Bulgaria Canada % voting power Chile % voting power China Croatia Cyprus % voting power Czech Republic % capital Denmark % capital Egypt Estonia 15 5 Faroe Islands % capital Finland % capital France 15 0/5 25% capital/10% capital Gambia 15 5 Georgia % capital Germany 15 0 Greece Greenland % capital Hungary Iceland % capital India Indonesia Israel % voting power Italy Ivory Coast Jamaica Japan 15 5 Kazakhstan % capital Kenya % capital Korea

13 Norway Ordinary rates Parent/ subsidiary Latvia 15 5 Lithuania 15 5 Luxembourg 15 5 Macedonia (1) Parent/subsidiary rate requirements Not Luxembourg except holding companies Malawi % voting power Malaysia 0 0 Malta Mexico 15 0 Morocco Nepal 15 5/10 Netherlands 15 0 At least 25%/10% of the share capital Netherlands Antilles 15 5 New Zealand Pakistan Philippines % voting power Poland 15 0 Company holding 10% of the capital for at least 2 years Portugal Qatar 15 5 Company holding 10% of the capital Romania Russia Senegal Sierra Leone % voting power Singapore 15 5 Slovak Republic 15 5 Slovenia 15 0 Company holding 15% of the capital South Africa % capital participation Spain Sri Lanka Sweden % capital Switzerland % capital Tanzania Thailand % capital Trinidad and Tobago Tunisia Turkey 15 5 Uganda Ukraine % capital (if dividend is exempt from tax for the recipient in its state of residence) or if derived by the Norwegian Government pension fund 5

14 Norway Ordinary rates Parent/ subsidiary (1) Parent/subsidiary rate requirements United Kingdom % voting power United States Venezuela % capital participation Vietnam 15 5/10 Zambia Zimbabwe At least 70%/25% of the share capital 1 Unless otherwise indicated, the reduced treaty rates given in this column apply if the recipient company owns at least 25% of the capital in the Norwegian company.. 6

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