With one of the best quality of life of Europe, Norway is a wealthy, stable democracy with an enviable ability to balance free-market capitalism and social welfare. As one of the biggest oil exporter of Europe, the business climate is surprisingly benign, with a flat corporation tax rate of 24%.
Norway imposes high rates of tax on individuals – the higher rate of personal income tax is more than 53% - but companies are treated more leniently. There is a flat rate of 25% on all capital income and in addition, Norway provides a full dividend credit. This means it has the lowest combined dividend tax rate in the OECD.
What are the main types of company in Norway?
The three most popular forms of corporate structure in Norway are as follows:
- private limited company (AS)
- public limited company (ASA)
- branch office of a foreign company
Main features of an AS
- most popular format for small and medium businesses
- minimum share capital 30,000 NOK (€4000 approx.), fully paid up
- at least one shareholder; board of directors required
- 50% of board members must be resident in Norway or in a EU/EEA country
Norway has low unemployment and high labour costs, which makes recruitment quite difficult generally speaking. There is a shortage of workers in certain sectors such as construction and it is worth noting that there are restrictions on bringing in foreign personnel from abroad. Obtaining work permits, particularly for semi-skilled workers, can also be problematic.
Norway has significantly softened its regulatory regime in recent years. Foreign exchange controls were largely abolished in the early 1990s and profits and dividends can be freely repatriated subject to Central Bank reporting requirements.
Concerning foreign investors, the Norwegian government places foreign investors on an equal footing with domestic investors, but there are exceptions where the authorities feel the country's strategic interests would otherwise be threatened. For example, foreigners may own no more than 40% of a Norwegian fishing fleet. Foreign ownership of a Norwegian air transport company is restricted to 30% but the all-important oil sector is now largely free of restrictions for international investors.
Norway offers no significant general tax incentives for either domestic or foreign investors but there are exceptions for specific regions and industrial sectors:
- companies investing in Norway's far north pay lower employee taxes
- tax rates are minimal on the Arctic island of Spitzbergen
- a state fund provides grants for investment in areas of low employment
- tax deductions are allowed for research costs in key sectors such as oil
Please contact us and we will be pleased to discuss matters in greater detail.