[ESTABLISHING A BUSINESS ENTITY IN NORWAY] 379
Any transfer of value whereby shareholders benefit, directly or indirectly, is classified as a distribution. The value shall be calculated using the fair value on the transfer date. In partnerships, all profits and losses are shared equally among all partners. There are no restrictions in terms of the shareholders’ non- distributable equity as there is in limited liability companies. However, there is a formal requirement that the financial statements are approved by a partnership meeting before the distribution takes place. 4.3.2 Tax 4.3.2.1 Limited liability companies The profit from limited liability companies is taxed at a rate of 22%. When profit is being distributed to personal shareholders, tax is calculated after the deduction of a risk-free return, referred to as the shareholder model. This means that a further 31,68% tax is levied on the profit, after the deduction of the deductible risk-free return. Foreign shareholders who receive dividends from a Norwegian corporation pay income tax (withholding tax) to Norway at the rate of 25%. Foreign shareholders who have been living in Norway, pay tax on gains from shares in the Norwegian company until five years after that he or she moved from Norway. A tax treaty may limit the right to demand such tax on gains. 4.3.2.2 Partnerships Partnerships are not separate taxable entities. The partners are responsible for the partnership's tax payments. The net profit is taxed at a rate of 22%. When the profit is distributed to a physical partner, tax is calculated on the distributed amount after the deduction of paid tax. This more or less equals the maximum tax rate in a limited liability
company. Any remuneration for work will reduce the calculated profit. 4.3.2.3 Sole Proprietorships As the proprietor of a sole proprietorship, you are responsible for the enterprise's tax payments. The enterprise is not a separate taxable person. The proprietor pays advance tax for each period as soon as the income arises, and payment forms for advance tax are sent to the proprietor four times a year. The tax office calculates the amount of tax payable based upon the profit for the previous year. 5. NUF - Norwegian-registered foreign enterprises – An alternative form of conducting business activities in Norway. A foreign enterprise that wishes to do business in Norway, can register a branch of the foreign enterprise in Norway. If a branch is set up in Norway, the foreign company is liable for the business conducted by the Norwegian branch. If the branch does not operate from a fixed place of business in Norway and is liable for VAT according to the provisions of the VAT Act, a Norwegian value added tax representative must be registered by the authorities. If Norway does not have an agreement with the country of the trader on the exchange of information and mutual assistance in the recovery of claims, the representative will be jointly and severally liable for payment of VAT. The branch will normally be liable to tax in Norway and will otherwise have to comply with Norwegian regulations. In order to employ foreigners, residence permits must be issued. No equity requirement applies to the establishment of a branch. However, foreign enterprises conducting business in Norway are
ILN Corporate Group – Establishing a Business Entity Series
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