12th March 2018
Non-Norwegian enterprises without a permanent establishment in Norway may obtain relief from the corporate tax return filing obligation. MSI's Norwegian law member Magnus Legal provides further information.
Basic corporate tax return filing obligations
According to Norwegian domestic law all enterprises that conduct business activities in Norway must annually file the corporate return. The tax return for income year ending in 2017 is due within May 31, 2018. This filing can only be made electronically via www.altinn.no.
Failure of filing the tax return within due date will be hit by a late filing penalty fees of up to approximately Euro 6 000 and if no tax return is filed, the enterprise may be hit by a deemed tax assessment and severe penalty taxes.
The tax return filing obligation basically also rest with non-Norwegian enterprises even though they according to a relevant tax treaty should be exempted from tax liability to Norway, e.g. because the activities in Norway do not constitute a permanent establishment.
For the tax year 2016, the Central Office – Foreign Tax Affairs (“COFTA”) was firm in its opinion that it was not possible to exempt from the filing obligation according to the new Norwegian Tax Administration Act. Therefore, foreign enterprises claiming that they should have no tax liability had to file regular tax returns with extract of accounts and at the same time claiming tax treaty relief.
Filing exemption may be granted
Magnus Legal has recently been informed by COFTA that the position has been changed. COFTA is now willing to up front assess the tax liability of foreign enterprises. Provided COFTA concludes that the enterprise does not have a permanent establishment in Norway, COFTA may accept to delete the entity from the tax register. Consequently, COFTA can confirm that they will not pursue the obligation to file the corporate tax return if the return is not filed within due date. COFTA will also be able to confirm that the enterprise will not be hit by the late filing penalties, etc.
It is important to note that the enterprise must fulfill its other Norwegian compliance obligations, e.g. related to reporting employees working in Norway, withholding employees’ salary tax, filing the annual financial accounts, etc.
Foreign multinationals with business operations in Norway that are deemed not to constitute a permanent establishment in 2017, should approach the tax office in order to request a tax assessment ruling with the aim to be delisted in the corporate tax register. The application should be issued as soon as possible, in order for COFTA to handle the application prior to the filing deadline. Magnus Legal has vast experience in this field and may assist in an efficient and cost saving way.
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