Business in Norway

COMPANY ESTABLISHMENT

Before undertaking business activity in Norway, it is necessary to choose which type of legal entity to form. The type of business form will influence all activity of the company, which includes financial and tax reporting, customs as well as currency control. Therefore, an investor should pay special attention when determining the appropriate corporate form since this will help to achieve goals that are set while meeting all legal requirements. Branch for foreign company is not recommended in many cases.

Most common legal entities in Norway are: sole proprietorship (ENK), foreign company`s branch in Norway (NUF) and limited liability company with shares and board (AS). When establishing business in Norway there is no need for a local partner.

Foreigners in Norway can act as sole proprietors. The sole ownership in Norway doesn’t require a minimum share capital. The founder is taking all the decisions necessary to the good function of the entity and can use the profits after submitting the personal tax income declaration to the tax authorities. Note that sole proprietor has a full financial risk.

Setting up business in Norway is easily done through the The Brønnøysund Register Centre. Altinn is the official website that provides all the information for establishing and running a business in Norway. You can find relevant information and guides about registering your business and operating in Norway.

TAX

As a standard, foreign companies that are established as a permanent entity and earn profits from Norway are liable to pay 23% Norwegian corporate tax on earnings. Both local and foreign companies are subject to the same Norwegian corporate tax rate.

Norwegian residents are tax liable to Norway for all global income. Norwegians and foreigners who have lived in Norway over 10 years are tax liable to Norway 3 years after moving abroad.

Standard VAT rate is 25%. Reduced rate for food and beverages is 15%. Export is without VAT. All businesses with vatable turnover are obliged to apply for registration in the Value Added Tax Register (VAT Register). Foreign businesses which have VAT liable turnover in Norway must register in the VAT Register in accordance with the same rules as Norwegian enterprises.

APPOINTMENT

The regulation of employment in Norway is governed by the Working Environment Act. It regulates the relationship between employers and employees. Norway does not have a common minimum salary, but labor unions have contracts which have to be followed always when working and operating in Norway. The main duty of the Norwegian labor law is to protect the employees.

Expats are liable to pay Norwegian taxes and social charges only if they stay in the country at least 183 days during a calendar year. Your employer will typically arrange for the registration with the Norwegian tax office and secure the social security number. Self-employed workers will need to arrange their tax registration and Norwegian social security number by themselves. Norwegian tax deduction is deducted from the gross salary by the employer.

Termination of the employment agreement at the probation period by the employee or employer may be carried out by providing two weeks’ written notice. After probation period is is difficult for employer to cut the agreement.

BEING AN EXPAT

The citizens of the member states of the European Union and the European Economic Area have the right to work in Norway. However registration might be needed. Expats from outside the European Union wishing to work in Norway must check for the rules from www.udi.no.

Expats living or working in Norway are obliged to pay taxes and contributions to the Norwegian social security system. It entitles to certain Norwegian social welfare benefits, such as unemployment benefits, basic healthcare in Norway, maternity and child benefits, and a Norwegian pension.

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