Company Registration in Norway
Kingdom of Norway is in the western part of the Scandinavian peninsula and extends about 1,100 miles (1,770 km) from the North Sea along the Norwegian Sea to more than 300 miles (483 km) above the Arctic Circle, the farthest north of any European country. Oslo is the capital of Norway.
With high standards of living due to the stocks of natural resources (especially on petroleum, forests and minerals) compared to the size of population, Norway is considered one of the most powerful countries in the world. Norway is placed in the top of the major exporters of oil, natural gas and fish. It’s also known as a great maritime power (bordering the North Atlantic Ocean and the Barents Sea) and a big hydropower producer.
Even though it has decided not to be an EU member, Norway has access to the European Internal Market by signing the EEU (European Economic Union) treaties. With flexible commercial laws for those willing to open a company in Norway and only a few steps that need to be fulfilled before starting a new business, this jurisdiction is considered one of the most suitable destinations for foreign investors.
Political establishment of Norway
Norway is a constitutional monarchy. Despite the fact, that Norway is a member of NATO, the UN, and the European Free Trade Association, it voted against joining the European Union in 1994, which member has Norway never became so far.
Economy overview in Norway
Norway uses its own currency which is the Norwegian Krone (NOK). Norway is one of the world’s wealthiest country per capita. The main industry focus of Norway includes oil and gas, telecommunications, hydropower equipment, timber and metal products and seafood. Its merchant and oil-tanker fleets are one the world’s largest. Furthermore, its fishing flotilla lands Western Europe’s biggest catch.
Taxation in Norway
In general, the Corporate Income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, usually within one business year. Revenues from the Corporate Tax Rate are one of the most important sources of income for the Norwegian Government.
The Corporate Tax Rate is 27% on Corporate Profits and the Standard VAT rate is 25% (exceptions are applicable to particular services and goods as 15% and 8%).
Types of business entities in Norway
Foreign investors interested in opening companies in Norway, should become familiar with the legal entities available for incorporation in the country. The most popular business form, generally registered by small and medium businesses, is the private limited liability company (Aksjeloven). The incorporation of an A.S requires a minimum share capital of NOK 30,000 (approximately EUR 4,000). An AS company in Norway also need to appoint a board of directors, depending on turnover, balance sheet total number of employees it can also require an auditor.
This type of Norwegian company can be opened by at least one founder and the major decisions in it (such as appointing the executive bodies, the increase or decrease of the capital, the modifications brought to the statutory documents) are taken by the general meeting of the shareholders. The capital of such business is divided into shares and the decision to transfer these shares can be taken only by the majority of the votes of the members.
A Norwegian joint-stock company (Allmennaksjeselskap - A.S.A) is designated for larger businesses, and the required capital, divided into shares, cannot be less than NOK 1,000,000 (approximately EUR 125,000). The capital of the A.S.A is divided into stocks which can be transferable to the public and it may also be registered with the stock market. The registration with the stock market is important because it is a modality of increasing the share capital. The major decisions are also taken by the general meeting of the shareholders while the daily decisions are taken by the members of the management board.
A business form in which the liability of the members is unlimited is the Norwegian partnership, which can be registered as general or limited. A Norwegian General Partnership is formed by equal partners who can split the profits and are fully liable for the entity’s actions, while a Norwegian limited partnership is formed by a general partner and at least one silent partner. The silent partner is bringing a contribution to the entity’s capital and it has a limited liability to the extent of his contribution while the general partner has full liability in the partnership (even with his own assets).
What are the main characteristics of a private limited company in Norway?
As mentioned above, this business form is of high importance to small and medium sized companies operating on the Norwegian market, but is also the main type of legal entity that is employed when operating through a subsidiary in Norway. When setting up this business form, it is necessary to appoint at least two directors and one of them has to be a Norwegian resident. The aforementioned director can also be resident in one of the member states of the European Economic Area. Besides these characteristics, the private limited company in Norway is also represented by the following:
• limited liability for the company’s founders – the shareholders have the advantages of a limited liability for any corporate debt, in the amount of the capital they have contributed with;
• right of being an employee – the company’s representatives can hire themselves as employees of the company, which will give them the social benefits and rights available for regular employees;
• separate legal personality – the business form is considered a different legal entity than the investors, which is not applicable to all Norwegian legal entities (the sole trader, for example);
• investor friendly – the business form offers the same regulations that are applied to Norwegian businessmen.
What are the main taxes applicable to a Norwegian limited liability company?
Since the company is created to perform commercial activities, it will be liable for taxation in Norway. At the level of 2018, the profits derived from a limited liability company are taxed at a rate of 23% and it is calculated for the profits of an income year (the corporate tax was reduced from a rate of 24%). The tax has to be paid in the following year, in two filing sessions.
This business form may also conclude dividend payments in which case the company will be liable to taxation. In 2018, the tax applicable to natural persons acting as shareholders is imposed at a rate of 30,59%, while the same procedure, applied to corporate shareholders, is generally exempted from taxation. Another tax applicable to this legal entity is the value added tax . Depending on the company’s activities, the business form can benefit from lower VAT rates or even exemptions on this tax, as certain products and services are included in special categories of VAT.
What are the main corporate taxes applicable in Norway?
Although the corporate tax is generally imposed at the rate of 23%, it is important to know that certain businesses that are related to financial activities can be liable to a higher corporate tax, imposed at the rate of 25%. Norway also applies the following taxes:
• social security – a tax imposed on the salaries of the company’s employees, which can vary between 0% to 14.1%, depending on the region in which the business operates;
• real estate property tax – companies occupying real state properties in Norway are required to pay a property tax which ranges between 0,2% - 0,7%, with the mention that certain Norwegian regions do not apply this tax;
• taxation of dividends – the taxation is concluded depending on the residency of the company; if the company is Norwegian based or a business from the European Economic Area (EEA) and it transfers dividends to a local company, the dividends are 97% exempted from taxation;
• companies are also liable to paying the capital gains tax, the stamp duty, the petroleum revenue tax and the tonnage tax.
Incorporation procedure in Norway
The specific of the Norwegian company formation procedure is that it is performed through the Brønnøysund Register Centre. In the beginning of the process of company formation in Norway, the founders must open a bank account and deposit the company’s capital. The bank will issue a deed of deposit and the balance sheet must be examined by an outside auditor. This auditor will issue a statement confirming the opening balance and the company's acceptance of the auditor appointment.
The documents necessary for registration in the Norwegian Register of Business Enterprises can be deposited online through the web based filling system, in person or through post. The VAT registration form can be submitted at the same time as filing for company registration and it is necessary when the annual turnover will exceed NOK 50,000.
The last step of the company formation procedure in Norway is enrolling in the mandatory workers’ injury insurance and arrange for mandatory occupational pension plan for employees.
How to invest in Norway as a foreign businessman
Foreign businessmen who intent to start a company in Norway or to invest in a local business can obtain a Business Visa. This visa can only be obtained if certain legal requirements are met, one of them being the minimum investment that will be performed by the foreign businessman in this country, which is set up at EUR 100,000 (this being the minimum threshold, but the entrepreneurs may also invest a larger sum of money).
In order to obtain this type of visa, the investors will need to be the owners of one of the permits that are issued for this purpose, in this case, the C visa, the D visa or the Residence Permit. However, it is necessary to know that the issuance of the visa is limited to investments in several economic sectors, such as shipping, oil and gas, IT data centers, seafood industry or the green energy sector.
This document allows foreigners to live in Norway and apply for permanent residency, which can only be granted by the local authorities if the person has been living in this country for minimum 3 years. Foreign businessmen may also apply for the Norwegian citizenship after 7 years of continuously living in Norway.
Important aspects to know when opening a company in Norway
As a general rule, the procedure of company registration in Norway takes between 5 to 7 weeks, depending on the business form chosen for registration. As mentioned in this article, the company has to establish a corporate bank account for the newly founded business, a procedure which can take approximately 4 weeks.
Legal entities registered in this country can be established with 100% foreign ownership and the investors are not required to travel into Norway for the registration procedure of their business. Also, foreign investors can freely enter import-export activities in this country and they can easily rent an office space in one of the Norwegian regions.
For complete assistance in order to incorporate a company in Norway and the whole procedure, please feel free to contact our company registration experts in Soha Europe Invest Company.
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