CMS Expert Guide to Holding Company Regimes in Norway

Norway does not have a specific tax regime for holding companies. However, basing a holding company in Norway can still be a viable option due to the vast network of tax treaties that Norway has entered into, as well as generous participation exemptions in relation to both dividends and capital gains received by corporate shareholders.

Any company tax resident in Norway (and therefore a holding company tax resident in Norway) will in principle be subject to 22% corporate income taxation. Inbound dividends and capital gains on shares are widely exempted from taxation under the Norwegian participation exemption (a 0.66% effective taxation rate applies on ownership lower than 90%).

• Dividend income on qualifying shares is subject to 0.66% taxation. If the holding company owns more than 90% in the foreign company, the tax rate is 0%. Where inbound dividends are received from companies outside the EEA, there is a 10% ownership requirement which must be met for more than two years in order to qualify for this exemption.
• Capital gains on qualifying shares are exempt from taxation.
• Dividend distributions made to companies genuinely established in the EEA are not subject to dividend withholding tax.
• Distributions to companies outside the EEA are subject to withholding tax ranging from 0 to 25% depending on the applicable tax treaty.
•  Distributions to individual shareholders, within or outside EEA, are normally subject to 15% withholding tax per applicable tax treaties. The withholding tax on dividends to shareholders in non-treaty jurisdictions is 25%.
• In normal circumstances, withholding taxes are not applicable to other cross-border payments. Withholding taxes on interest and royalties only apply where the recipient is an affiliated party resident in a low-tax jurisdiction (less than approximately 14.52%, which is equal to two-thirds of the Norwegian nominal corporate income tax rate). Payments to a recipient genuinely established in the EEA are generally exempt from such withholding taxes.
• Interest payments are generally deductible, but may be subject to interest deduction limitation at a fixed ratio of 25% of tax EBITDA. Important exemptions may apply (such as an equity escape provision).

The Norwegian corporate tax regime is notable for its vast network of double tax treaties, the availability of binding advance tax rulings, and lack of withholding tax on non-dividend payments.