doing business in norway - scott-moncrieffeuropean economic area agreement (t he eea agreement, see...

PREC ISE . PROVEN. PERFORMANCE .Professional practices

Doing business in Norway

Moore Stephens Norway DA

- an introduction (2012)

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Doing business in Norway – an introduction (2012)

Copyright © MOORE STEPHENS NORWAY DA Updated: January 1, 2012

About Moore StephensThe material included in thisintroduction to Norway is assembled byVeel Karlsen & Co ANS in Oslo, anindependent associated firm of MooreStephens Norway DA. See Appendix Hfor more information about MooreStephens International and theNorwegian Moore Stephens associatedfirms.

All firms are independent entities,owned, controlled and managed locally,without any partnership between them.However, the firms actively strive towork together, sharing information,talent and know how.

About this publicationThe purpose of the publication is to givean introduction to those consideringstarting business in Norway. Ourintention is to provide a description ofthe business environment and the mainaspects of the legal framework ofNorwegian business life.

For readers actually planning to dobusiness in Norway, we recommendprofessional assistance. Please contactthe liaison partner in one of theNorwegian member firms listed below ifyou wish to discuss any matter infurther detail.

We believe the information included inthis introduction to be correct at thetime of printing. However, we cannotaccept responsibility for any loss as aresult of acting or refraining of actingbased on information in the publication.

Moore Stephens Norway member firms - contact information

MOORE STEPHENS NORWAY DA - Oslo VEEL KARLSEN & CO ANS - OsloTullins gate 2, N-0166 Oslo Tullins gate 2, N-0166 OsloLiaison partner: Kåre Kjøllesdal Liaison partner: Kåre KjøllesdalTelephone: +47 22 98 15 40 Telephone: +47 22 98 15 40Fax: +47 22 98 15 41 Fax: +47 22 98 15 41E-mail: [email protected] E-mail: [email protected] site: http://www.moorestephens.no Web site: http://www.veelkarlsen.no

PROFERO REVISJON DA - Oslo MOORE STEPHENSTullins gate 2, N-0166 Oslo CONSULTING AS - OsloLiaison partner: Lill Ann Monge Tullins gate 2, N-0166 OsloTelephone: +47 22 98 15 40 Contact partners: Kåre KjøllesdalFax: +47 22 98 15 41 ([email protected])E-mail: [email protected] Torhild SøbergWeb site: http://www.proferorevisjon.no ([email protected])

Telephone: +47 22 98 15 40Fax: +47 22 98 15 41Web site: http://www.moorestephens.no

Doing business in Norway – an introduction (2012)Page 2 of 62


Table of contentsPage

1. Norway at a glanceGeography, climate and population 5Politics, government and legal system 5Education 5Religion 5Currency rates 5Economy and standards of living 6European cooperation 6Monopolies and restraint of trade 7Restrictions on foreign ownership 7Sources of finance 7Tax incentives on investments 7The labour market and labour market legislation 7The social security system, holiday payment, accident liability insurance

and mandatory occupational pension scheme 8Visa and entry requirements 8Communication style, business protocol, etiquette and negotiating behaviour 9

2. Forms of business organizationIntroduction 11Limited liability companies 11Public limited liability companies (ASA) 11Private limited liability companies (AS) 11Branches of foreign companies 11Partnerships 11Joint ventures 12Sole practitioners (self-employed) 12Representation offices 12European companies (SE / Societas Europaea) 12Other corporate forms 13

3. Establishment procedures and statutory requirementsProcedures for formation 13Memorandum of association 13Articles of association 13Capital 14Liabilities of shareholders, Board Members and the general manager 14Costs of incorporation and later changes 14Management 14Information on public record 15Shelf companies 15Registration of business organizations 15Foreign entities starting business in Norway 16




4. Accounting and reporting requirementsDocumentation and records requirements 16Accounting period 19Local accounting standards/principles and differences to IFRS 19Differences in NGAAP between small and non-small companies 23Valuation rules 24Equity requirements and limitations of dividends 24Form and content of financial statements (annual accounts) 25Public information / filing 26Liquidation 27

5. Audit requirements and standardsNational basis for audit / statutory audit requirements 27Appointment of auditors 28Local auditing standards and differences to international standards 28Independence 28Reporting and audit opinion 28Quality control 29Mandatory certifications 29

6. Corporate taxationTax rates and tax basis 29Residence, territoriality and permanent establishment 29Calculation of net taxable income and tax valuation principles 30Filing and signing of tax returns 33Payment, collection and interest 33Tax loss carry-forward/back 33Tax audits 33Items subject to withholding tax 33Taxation of branches and joint ventures 33Taxation of partnerships 34Taxation of sole practitioners (self-employed) 34Non-taxable companies and organisations 35

7. Taxation of shipping activitiesIntroduction 35Overview of the tax system 35Entry rules 36Exit rules 36Settlement of deferred tax from the previous tax deferral regime 37Tonnage tax 37Taxation of seamen 37Tax treaties 37

8. Social securityEmployers’ contribution 38Employees’ contribution 38International social security agreements 38




9. Personal taxationTax rates 39Calculation of net taxable income 40Tax payment 40Filing of tax returns 41Tax residency and immigration/emigration 41Non-residents 42

10. Value added tax (VAT)Overview of the system 43Registration procedures 43Taxable transactions, exemptions and zero-rated transactions 43VAT rates 44Deductions and refunds 44Import of services – the reverse charge system 44Filing of VAT-returns and payments 44Foreign businesses and VAT 45

11. Tax treaties 47

12. Miscellaneous taxesTaxation of foreign artists 48Inheritance/gift tax 48Real estate (property) tax and registration fee/stamp duty 48Other/special taxes/duties 48

13. Other issuesEmployment of foreigners and work permits 49Reporting of business activities in Norway and contracts/employees 49Taxation of N-CFC’s (Norwegian Controlled Foreign Companies) 50

AppendicesA – Useful web-links 51

B – Depreciation rates for tax purposes 52

C – Low tax countries (as defined by the Norwegian tax authorities) 52

D – Tax treaties 53

E – Considerations when doing business in Norway 56

F – Specimen audit opinion 57

G – Challenging requirements in the bookkeeping regulations 58

H – Information about Moore Stephens 60

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Doing business in Norway – an introduction (2012)


1. Norway at a glance

Geography, climate and populationNorway is located on the western half ofthe Scandinavian peninsula, with bordersto Russia, Finland and Sweden. Thecountry is the 7th largest in Europe withan area of 324.219 square kilometres(125.100 square miles), a long narrowshape and a coastline of 103.000 km, yetthe population is only 4.95 million.Oslo is the capital with 600.000inhabitants (1.100.000 in the larger Osloarea). Other larger cities: Bergen(250.000), Stavanger/Sandnes (200.000),Trondheim (160.000), Fredrikstad/Sarpsborg (120.000), Porsgrunn/Skien(85.000), Kristiansand (80.000) andTromsø (70.000).The coastal districts have a temperatemarine climate with mild winters andrelative cool summers. The interior andthe Oslo area, has colder winters andwarmer summers.

Politics, government and legalsystemNorway is a constitutional monarchy withan even distribution of power among thethree branches of government - theexecutive (the Government), thelegislative (the Parliament) and thejudicial (the Courts of Law). Legislativepower rests in the Parliament called“Stortinget” which is elected every fouryears by citizens aged 18 or above undera system of proportional representation.The country is political stable. The LabourParty (AP) has been in power mostperiods since WW II. At present theGovernment is a majority coalition of the

Labour Party (AP), the Socialist Left Party(SV) and the Centre Party (SP).Because of decades where no singleparty has held an absolute parliamentarymajority, politics in Norway arecharacterised by a consensual approach.The fact that the population ishomogeneous and unilingual, except fora small Lappish minority in the north,provides a stable business environment.The legal system goes back to the oldNordic law. After Norway’s entry to theEuropean Economic Area Agreement(the EEA agreement, see below),European Union rules and regulationshave to a large extent become an integralpart of Norwegian law.

Education24% of the population has an educationon university level and about 50% hasfinished high school (upper secondaryschool; 11. - 13. grade).

Religion85% of the Norwegians are members ofthe Evangelical Lutheran Church ofNorway.

Currency ratesDecember 31, 2011: NOK 1 = USD 0.166= EUR 0.129 (June 30, 2011: NOK 1 =USD 0.186 = EUR 0.128, December 31,2010: NOK 1 = USD 0.170 = EUR 0.128and June 30, 2010: NOK 1 = USD 0.154= EUR 0.126).

Economy and standards of livingTraditionally a country dominated byfisheries, forestry and agriculture, Norwayhas transformed its economy over thepast decades into a modern diversifiedindustrial country and today boasts one ofthe highest living standards in the world,with GDP (PPP) per capita in 2009 ofUSD 52.600 (United States: USD 46.400,UK: USD 34.600, Germany: USD 34.200,Denmark: USD 35.800, Sweden: USD36.000 and EU: USD 32.000 (estimate));



information from the InternationalMonetary Fund.

Norway was on top of the United NationsDevelopment Program “Human develop-ment index”, measuring achievements inlife expectancy, educational attainmentand adjusted real income, in 2001-2006,no 2 in 2007 and no 1 in 2008 - 2010.

Norway is number 10 on the WorldBank’s 2010 “Ease of doing businessindex”, scoring high on closing a businessand enforcing contracts and lower onemploying workers and dealing withconstruction permits.

The oil and gas industry in the North Sea,hydroelectric power, energy intensivemanufacturing industries, fisheries,forestry, shipping and tourism are mostimportant today. Norway has the world’s15th largest merchant marine (October2010), with a tonnage of 13 million grosstons (Panama is 1 with 193 and Liberia is2 with 99 million gross tons). 3.5% of theworld tonnage is controlled by parentcompanies located in Norway; number 7after Greece (15.9%), Japan (15.7%),China (9.0%) and Germany (8.9%).Norwegian exports are steadilyincreasing with about 80% to Europeancountries. Sweden, Germany, GreatBritain, USA, the Netherlands, Denmarkand France are the largest importers.The most important imports are cars,electrical equipment and machinery,metals, telecommunication equipment,textiles, clothing and footwear. Sweden,Germany, Denmark, Great Britain, USA,the Netherlands and France are thelargest exporters.The GDP-growth has varied between3.9% and -1.6% between 2000 and 2009with a growth of -1.6% in 2009. Norwayhas a substantial surplus on her tradebalance, to a large degree from export ofoil and gas. Norway was the 11th largest

oil producer in 2007, with a production of25% of Saudi Arabia’s, the world’s largestoil producer. It was the world’s 4th largestnet oil exporter in 2007 (with 29% ofSaudi Arabia’s export). Norway is the 6th

largest natural gas producer and thecountry is the 3rd largest net natural gasexporter, with 44% of Russia’s export, theworld’s largest gas exporter).The inflation has varied between 0.6%and 3.0% between 2000 and 2009 withan inflation of 2.1% in 2009. The averageinterest rate in banks has varied between8.8% and 3.9% between 2000 and 2009with an average interest rate of 4.9% in2009. The unemployment rate has variedbetween 2.5% and 4.9% between 2000and 2009 with a rate of 3.2% at the endof December 2009.

European cooperationNorway is not a member of the EuropeanUnion (EU). However, there is a largedegree of economic co-operation with theEU-countries through the EuropeanEconomic Area Agreement (the EEAagreement; between the EU-countriesand Iceland, Liechtenstein and Norway).Under this agreement, Norway largelyadheres to the EU-principles of freemovement of goods, persons, servicesand capital and the agreement givesNorway access to the EU’s internalmarket for most products.



Monopolies and restraint of tradeGeneral provisions against harmfulrestrictive practices regulate monopoliesin Norway. Market dominance is notformally prohibited, however, if adominant enterprise affects prices in amanner not considered beneficial to theeconomy, the Competition Authority(Konkurransetilsynet) is authorised to actto remedy the situation.Restrictions on foreign ownershipThe government maintains an openposition towards foreign investment inNorway, and free enterprise, free tradeand deregulation of business is usuallyencouraged. Existing regulations,standards and practices may, however,marginally favour Norwegian,Scandinavian and EEA investors, in thatorder. A Norwegian company may be100% owned by foreign persons orcompanies. However, the companymust have a Norwegian address. TheCompetition Authority must be notifiedof mergers and acquisitions involvingcompanies with a total turnover of NOK50 million or more, but not if only one ofthe involved companies have a turnoverof 20 million or more. Themerger/acquisition cannot be finalizedbefore the Competition Authority hasconcluded. The transaction is approvedif a request for further information is notreceived from the Competition Authoritywithin 15 days.Special ownership rules apply toforeigners investing in fisheries, airtransport, finance, insurance, energyand offshore activities. There are nodirect price controls on imports orexports and no exchange controls onpayments for dividends, branch profits,royalty and service fees to foreignrecipients. However, indirect pricecontrols/ price fixing exist in the oilindustry, within electricity utilities andwithin the fisheries.

Sources of financeBanks, factoring companies, leasingcompanies and the Norwegian Industrialand Innovation Norway, are the mostimportant sources of finance.Tax incentives on investmentsNo free trade zones and few taxincentives for investment exist.Examples are lower social security, seeparagraph 8, and lower tax rates andextra deductions for individuals, seeparagraph 9, in the northern regionsNord-Troms and Finnmark and somegovernment programs for research anddevelopment and exports.

The labour market and labour marketlegislationThe Norwegian labour market hastraditions of stability and ischaracterized by good employer-employee relations. Labour costs arehigh and represent a large percentageof total production costs. Central wagenegotiations are done annually betweenthe larger employee’s and employer’sorganizations. The results of thesenegotiations tend to serve as guidelinesfor the local wage negotiations.An agreement in writing between theemployee and the employer is alwaysrequired. A normal annual salary wouldbe in the range of NOK 375.000 –475.000, depending on type of industryand geographical location. The averagesalary in 2009 for all employees wasNOK 422.400 and the average for the10% best paid was NOK 822.000 (the10% lowest: NOK 238.800).



The increase in disposable real incomefrom 2000 to 2008 was 30%. There isno legally stipulated minimum wage.Fringe benefits such as pensions,car/travel allowance, free newspapersand telephone are often offered but notrequired, except for a mandatorypension scheme, see below.It is not permitted to employ childrenunder the age of 13 and there arespecial provisions for children betweenthe age of 13 and 18. Temporaryemployment is as a general rule notpermitted. Minimum notice periods fortermination and dismissals vary fromone to six months subject to the periodof employment and the age of theemployee. To be lawful, dismissals mustbe based on altered conditions in or forthe company, or circumstances directlyrelated to the work performance.Normal working hours are 37.5 hoursper week. Allowed amount of overtimeper day, week and year is strictlyregulated by law and night work isusually prohibited. There are provisionsfor the rights of the employees in caseof sale of a company, includingprovisions for salaries, workingconditions and dismissals.

The social security system, holidaypayments, accident liabilityinsurance and mandatoryoccupational pension schemeAll persons resident in Norway,including foreigners employed inNorwegian companies with certainexceptions, are covered by the NationalInsurance Act. The national insurancescheme covers medical treatment,sickness benefits after 16 days (theemployer pays normal wages for thefirst 16 days), cash benefits inconnection with maternity/adoptionleave, child benefits, support during theillness of children, old-age pensions andunemployment benefits. The financing is

based on payments from employees,employers and the government, seeparagraph 8.

All employees are usually taking fiveweeks of holiday per year. However,the last four days are by bindingagreement only for employees beingmember of an employee organization.The employee shall receive holiday pay,paid by the employer, normally 12% ofgross wages (excluding holiday pay) inthe preceding year.

Employers must, according to theWorking Environment Act, enter into anemployers’ liability insurance to coveraccidents at work.

All employers must also establish apension scheme for all employees. Theemployers contribution must be at least2 % of the employees’ gross earningsbetween 1 and 12G (G = the NationalInsurance basic amount = NOK 79.216as at May 1, 2011).

Visa and entry requirementsA valid passport is required to enterNorway. Norwegian entry visas aregoverned by the rules of the SchengenAgreement. According to this accord, avisa issued for admission to most EUcountries (including the EEA countriesNorway, Liechtenstein and Iceland) isalso valid for admission to othermember countries. Under Schengenvisa procedures, a tourist is onlypermitted to spend a total of threemonths in the “Schengen area” withinany six-month period.



Communication style, businessprotocol, etiquette and negotiatingbehaviourCommunication styleMost Norwegians speak and readEnglish fluently and many speakGerman or French. At the initial meetingNorwegians are usually ready to talkbusiness after a few minutes of smalltalk. Light conversation does notrepresent an important part of doingbusiness. Norwegians get to know theircounterparts while talking business andthey are used to a frank and straight-forward language. On the other hand,when not really interested in a deal, theymay be reluctant to say so bluntly.

Business visitors find Norwegiansegalitarian and less formal than peoplefrom more hierarchical cultures.Business meetings start on time inNorway. If you going to be a fewminutes late, call your counterpart toexplain the problem and advise yournew arrival time. It is considered politefor visitors to suggest a probable endingtime for the first meeting, if possible.This allows your counterparts to plantheir day. Meetings are rarelyinterrupted by phone calls or otherintrusions. Schedules and deadlines arefirm. Norwegians quickly lose interest indealing with business partners who failto meet obligations in a timely manner.

Although a warm and friendly people,most Norwegians are restrained in theirverbal and nonverbal communicationand this may sometimes bemisinterpreted as lack of interest in adiscussion. Norwegians tend to be soft-spoken and taciturn. On the other hand,business visitors will not experience anylong gaps in conversation. It is usuallynot considered acceptable to interruptanother speaker at meetings.Norwegians tend to stand at an arm'slength distance from conversational

partners in business gatherings. Expectlittle touching except for the hand-shake,and avoid arm grabbing andbackslapping. Visitors from expressive,high-contact cultures should, however,not misinterpret Norwegian reserve ascoldness or arrogance.

At the bargaining table, Norwegiansnormally employ moderate gazebehaviour, i.e. alternately looking theircounterparts in the eye and then lookingaway. Norwegians use few hand andarm gestures and facial expressionsduring negotiations. The 'A-OK' thumb-and-forefinger circle gesture is usuallyconsidered rude.

Business protocol and etiquetteOffice hours are normally from 8:00 a.m.to 4:00 p.m. Monday through Friday.Summer hours are often from 8:00 a.m.to 3:00 p.m. Avoid the summer holiday,usually the last part of June to the firstpart of August and the week before andafter Christmas, the week before Easter,May 17th (Norway’s National Day) andMay 18th. Be aware that if a publicholiday falls on a Thursday, Norwegiansare likely to take Friday off. They alsolike to leave the office promptly at anordinary working day.

Male business visitors should normallywear a suit or jacket and tie. Womenmay wear a suit, dress or dressy pants.

Despite the Nordic reserve, expect awarm, friendly welcome. The greetingwill typically be a firm brief handshake,with steady, moderate eye contact.Shake hands with each person presentand again when leaving. SomeNorwegians may regard the Americangreeting, "How are you?" as a personalquestion which requires a detailedresponse. Better are impersonalexpressions such as "Good morning" or"Good afternoon."



When introduced for the first time,address your counterpart by his or herfull name. However, Norwegians oftensuggest the use of first names.Professional titles such as Doctor andProfessor are used, followed by thefamily name, whereas business titlessuch as “Director” are not used.

Norwegians appreciate modesty and acertain degree of humility. Theynormally consider flaunting wealth orsuccess to be in poor taste. Be sure toavoid comments which could be takenas boastful or self-promoting. Goodtopics of conversation include hobbies,politics, travel and sports. Avoid criticismof people or cultures, Norwegians valuetolerance and charity.

Except for Christmas presents and logoitems, this is not a gift-giving businessculture. However, upon successfulcompletion of negotiations, a bottle ofcognac or whisky will be welcome.

Norwegians often invite visitors out formeals. Business entertaining is usuallydone at lunch or dinner. If the meetingtakes place in the late morning, you mayinvite your local counterpart for lunch.The person who invites usually pays thebill. It is usual to discuss businessduring lunch. At a business dinner it ispolite to wait for the host to bring upbusiness matters. It is perfectlyacceptable for a female business visitorto invite a male counterpart to dinner,and she normally will have no problempaying the bill. A woman alone will alsofeel comfortable in a restaurant or bar.It is not uncommon for visitors to beinvited home for a meal. Dinner is

commonly served around 7:00 p.m. Ifyou are going to be more than a fewminutes late, call. Expect to leavearound 10:00 p.m. in the winter, about11:00 p.m. in the summer. Unless yourhosts are smokers, do not light up in aprivate home or in an office withoutasking permission. It is polite to bringchocolates, pastries, wine, liquor orflowers. Present the gift to the lady ofthe house, who is likely to open it uponreceipt.

Negotiating behaviourNorwegian business people reactfavourably to a well-documented,straightforward approach without hypeor exaggerated claims. In contrast tosome other northern European cultures,humour is quite acceptable duringpresentations. Jokes and casualconversation mix well with seriousbusiness discussions. But rememberthat self-deprecating humour is leastlikely to offend.

Avoid a negotiating tactic starting offwith a highly inflated initial offer andthen offering price reductions. Usingartificial deadlines as a pressure tactic isalso likely to back-fire. Far worsehowever would be to offer, directly orindirectly, any kind of inducement whichcould be taken as a bribe. Norwayconsistently ranks at the top of any listof corruption-free countries. The writtenagreement is regarded as definitivewhen subsequent businessdisagreements arise. Norwegians reactnegatively if a counterpart relies on thestrength of the relationship torenegotiate terms after the contract hasbeen signed.



2. Forms of business organizationIntroductionActivities are regarded as businessactivities if they involve transactions ofan economic nature that involve aminimum activity that exceed thethreshold of a hobby, have a minimumduration, have a potential of generatingprofits and is carried out on theindividual’s own expenses and risks.Business can be done throughcompanies, partnerships, joint venturesor by individuals acting as solepractitioners (self-employed). Thechoice will be influenced by the extent ofpersonal responsibilities, risks, taxes,rights, duties and the liberty to managethe assets of the business.A company - the most common form isa public or private limited liabilitycompany - is a distinct legal entitycreated to separate the company’sbusiness from the personal affairs of itsowners. Investors can choose theirpreferred form of entity. Smallcompanies are usually organised asprivate limited liability companies,whereas large companies often chooseto establish themselves as a publiclimited liability company.Limited liability companiesPublic limited liability companiesIn Norwegian: Almennaksjeselskap,abbreviated ASA.Private limited liability companiesIn Norwegian: Aksjeselskap,abbreviated AS.The main differences between a public(ASA) and a private (AS) limited liabilitycompany are: minimum paid in share capital (ASA: NOK

1.000.000 and AS: NOK 30.000) the shares of an ASA must be registered with

Verdipapirsentralen (VPS) – The NorwegianCentral Securities Depository

only an ASA can use certain types of financialinstruments or use a public prospectus forshare issues the minimum number of Board Members are

different, see paragraph 3 below the general manager (Corporate Executive

Officer) cannot be elected as the chairman ofthe Board of an ASA only an ASA may be listed on the Oslo Stock

Exchange only an AS may arrange the annual general

meeting without a physical meeting (but only ifthe company has less than 20 shareholders) less stringent rules for mergers and

demergers for an AS than an ASA less stringent rules for capital increases for an

AS than an ASA less stringent accounting and valuation

principles for an AS than an ASA (seeparagraph 4 below) the number of mandatory notes is lower for an

AS (see paragraph 4 below) more stringent procedures for Board

approval and note disclosure of salaries,share options and other remuneration to thegeneral manager and key executives for anASA

Branches of foreign companiesA registered branch office of a foreigncompany (Norskregistrert UtenlandskForetak (NUF)) is entitled to carry outany business activity included in theobjectives of the foreign company; thatis liable for all liabilities of the branchwith all its assets, at home and abroad.The foreign “head office” must registerthe branch office with The Register ofBusiness Enterprises (Foretaks-registeret). There is no equityinvestment requirement and norequirement for a separate Board ofDirectors.

PartnershipsThe legal identities of partnerships arenot distinct from the personal identity ofthe partners who have unlimited liabilityfor the debts of the business. Threemain kinds of partnerships are available:



a partnership with joint and severalliability (ANS – ansvarlig selskap),where each participant has unlimitedpersonal liability for the obligations ofthe enterprise, a partnership with divided liability (DA

– selskap med delt ansvar) where theparticipant’s liability is limited relativeto each participant’s share of thepartnership and a limited partnership (KS–kommanditt-

selskap) where at least one partnerhas unlimited liability for thecompany’s total obligations while theliability of each of the other partners islimited to a fixed amount. The partnerwith unlimited liability is normally anAS or ASA and this partners’ minimumpartnership share is 10%.

It can also be arranged to include asilent partner where it is agreed that theparticipation shall not appear towardsthird parties, where the silent partner isliable only for a fixed amount and whereit can be agreed that the silent partnershall be allocated a share of theprofit/loss (a silent internal partnership –stille/indre selskap).There are no equity investmentrequirements for partnerships.Joint venturesA joint venture (samarbeidsavtale) is abusiness enterprise regulated by anagreement between two or moreparties. Joint ventures are frequentlyused in project related activities, oftenbuilding projects. There is no equityinvestment requirement.Sole practitioners (self-employed)Legal identities of sole practitioners(enkeltpersonforetak) are not distinctfrom the personal identity of theparticipant, who has unlimited liability forthe debts of the business. There is noequity investment requirement.

The following criteria usually indicatethat an individual qualify as a solepractitioner and is not regarded as anemployee: the activities of the individual is carried out on

the individual's own expenses and risks the individual covers all expenses, has the

responsibility and/or the risk for the contractprofit the individual has more than one principal, has

its own office, tools and materials and/or mayuse own employees the payment is not based on an hourly rate

No single criterion is considereddecisive. The tax authorities willexamine the assignment as awhole before a decision is reached.

Representation officesRepresentation offices may beestablished for information activitieslimited to "auxiliary and preparatorycharacter". The activities must notinclude any kind of sales activities orpower to conclude binding contracts forsales on behalf of a non-residententerprise. If these conditions are notmet, the activities are considered as a“permanent establishment” in Norway,see detailed definition in paragraph 11.

European companies (SE / SocietasEuropaea)All provisions in the Council Regulation(EC) No 2157/2001, are incorporatedinto Norwegian law. Norwegiantaxation rules for liquidations, seeparagraph 7, will become effectivewhen a company is converted into anSE-company and moved out ofNorway. This is proposed changed,with no taxation for movements withinthe EU/EEC-area.



Other corporate formsOther corporate forms include agentsrepresenting a foreign company, co-operatives (samvirkelag), foundations(stiftelser) and legacies (legater)regulated in separate acts. A trust isnot treated as an independent subjectfor tax purposes, and it is thereforeseldom used.

The comments in the paragraphs belowrelate to public limited liabilitycompanies (ASA), unless otherwisestated.

3. Establishment proceduresand statutory requirements

Procedures for formationA national or a foreign investor whointends to set up a subsidiary in Norwaymay form a new company or purchasethe shares of an existing company. Thecompany is formed when theshareholders sign a memorandum ofassociation, in which the shareholderselect the Board of Directors and theauditor. A company in the process ofincorporation, and not yet registered, isnot considered to be an independententity, and the founders are fullyresponsible for any liabilities arisingfrom its activities. Upon registration thecompany takes over all liabilities,including the liabilities related toactivities carried out between the date offounding and the date of registration.The company must be registered withthe Central Coordinating Register forLegal Entities (CCRLE – Enhets-registeret) no later than three monthsafter the date of the Memorandum ofassociation (see below).

Memorandum of associationThe memorandum of association(stiftelsesdokumentet) must be prepared

and signed by the founders and thefollowing must be included: The articles of association (see below) The names, addresses and date of birth of the

founders The number of shares for each founder and

the subscription price of the shares The deadline for the subscription and payment

of subscribed capital The name of the members of the Board of

Directors The name of the auditor A balance sheet at the date of incorporation

signed by all founders must be enclosedFor other corporate forms, exceptbranches, joint ventures and silentpartnerships, there must be a writtenand dated partnership agreementsigned by all participants.

Articles of associationThe articles of association (vedtektene)must include the following information: The name of the company (at least 3

Norwegian letters or numbers and not identicalto names already registered, independent ofmunicipality and business sector) That the company shall be an ASA (no

requirement for an AS) Location of the registered office The business objectives of the company Share capital (size and number of shares;

common and preferred shares permitted) Number of Board Members Items to be decided by the Annual General

Shareholders’ Meeting



CapitalA public limited liability company musthave a minimum share capital of NOK1.000.000 intact after payment of theincorporation costs, see below.Consequently, a premium is neededunless it is included in the Memorandumof Association that the costs shall beabsorbed by the founders. Theminimum for a private limited liabilitycompany is NOK 30.000 (incorporationcost may be covered by this amount).The initial shares must be fully paidbefore registration, by payment in cashor other assets, including property,know-how and patents. A Norwegiancompany may be 100% owned byforeign persons or companies. Thereare no duties on share issues andsubsequent sales of shares (unlesstraded through brokers).

Liabilities of shareholders, BoardMembers and the general managerA shareholder’s liability is limited to theamount of shares subscribed or thepurchase price of the shares. However,the company, shareholders andcreditors may demand thatshareholders, members of the Board ofDirectors and the general manager(Corporate Executive Officer)compensate any loss which they mayhave caused by intent or throughnegligence during the performance oftheir duties.Costs of incorporation and changesThe costs of incorporating a Norwegiancompany typically amount to NOK10.000 – 15.000 for professionalcharges related to preparation ofmandatory registration documents andfees of NOK 6.382 (NOK 5.320 if filedelectronically) payable to the Register ofBusiness Enterprises (Foretaks-registeret). A flat fee of NOK 2.660 (May2011) is charged by the Register forlater changes.

Management (general manager,Board of Directors and the AnnualGeneral Meeting)The general manager’s primary task isthe day-to-day management of thecompany based on guidelines, if any,from the Board of Directors. The day-to-day management does not covermatters which, in relation to thecompany's affairs, are of an extra-ordinary nature or of major importance.The general manager must ensure thatthe accounts of the company are inaccordance with Norwegian legislationand regulations and that the assets ofthe company are managed in a soundmanner. At least every four months andevery month for an ASA, the generalmanager must make a statement on thecompany’s activities, position andprofit/loss developments to the Board ofDirectors at a meeting or in writing.The Board of Directors must consist ofat least three persons. However, if theshare capital for a private limited liabilitycompany is less than NOK 3.000.000,the Board may consist of one or twomembers and one deputy. The Boardappoints the general manager(Corporate Executive Officer). Thegeneral manager and at least half of themembers of the Board must bedomiciled in Norway or in an EU/EEA-country. An ASA must always appoint ageneral manager. The Board maydecide not to appoint a generalmanager in an AS if the share capital isless than NOK 3.000.000. The tasks ofthe general manager are in this caseperformed by the Board. The generalmanager cannot be elected as thechairman of the Board of an ASA or ofan AS with a share capital of more thanNOK 3.000.000. The employees areentitled to representation on the Board ifthe company has more than 30employees.



The Boards’ primary task is to ascertaina sound organisation of the company,including long term planning andbudgets, and if necessary to defineguidelines for the activities of thegeneral manager (Corporate ExecutiveOfficer). The Board must be up to dateabout the company’s financial position,including a review of the generalmanagers’ reporting, see below, and afollow-up of a sufficient equity level (seeparagraph 4). The Board must ensurethat the companies’ activities, accountsand asset management are subject toadequate controls. The Board in an ASmust approve the salaries, shareoptions and other remuneration to thegeneral manager and to keyexecutives in a meeting. The Board,the general manager and keyexecutives cannot receiveremuneration from other firms, exceptfrom group companies.

Companies with more than 200employees must elect a “corporateassembly”, with two-thirds of therepresentatives chosen at the annualshareholders’ meeting and theremaining one-third selected byemployees.

A limited liability company must holdan Annual General Meeting (AGM)within six months after the close ofeach financial year, with the followingitems usually on the agenda: approvalof the annual accounts and directors’report, approval of distribution ofdividends (if any), approval of the auditfee, approval of the Boards’ proposalfor salaries, share options and otherremuneration to the general managerand key executives (in an ASA),approval of all purchases from or salesto a shareholder/ Board member/general manager (transactions outsidethe ordinary activities of the company)if the market value exceeds NOK

50,000 and 10% of the share capital atthe transaction date (sales/purchasesbelow NOK 50,000 can be approvedby the Board of Directors),appointment of new Board members (ifany), appointment of a new auditor (notreappointment) and any other businessthat, by law or pursuant to the Articlesof association, is to be approved at theAGM.

Information on public recordThe following details of the companymust be filed on a public record withThe Register of Business Enterprises(Foretaksregisteret): the share capital,names and addresses of the Board ofDirectors and the general manager, theArticles of association, the name of theauditor, the financial statements (whichmust be filed within seven months afterthe company's year-end, but no laterthan one month after the AGM).Shelf companiesAcquisition of a shelf company allowsinvestors a prompt start-up of business.Immediately after the acquisition hasbeen concluded, an extraordinaryshareholders' meeting is held in order tovote for the necessary changes to theArticles of association and to elect newBoard Members and/or auditor.

Registration of businessorganizationsPublic limited liability companies,personal limited liability companies,branches of foreign companies,partnerships, sole practitioners andfoundations or associations conductingbusiness activities must be registeredwith The Register of BusinessEnterprises (Foretaksregisteret).To have an enterprise registered, whichnormally takes about two weeks, part 1of the combined registration form“Samordnet registermelding” and, ifliable for VAT also part 2, must be



prepared and submitted to the Registry.Following registration, the company willreceive a nine-digit organization number(needed for identification purposes,including opening of bank accounts,hiring employees and registering in theVAT-register).Some types of businesses requireauthorization before starting business.Authorization is required for businesseslike driving instructors, doctors,physiotherapists, auditors, accountants,lawyers, stock-brokers and real-estatebrokers.

Foreign entities starting business inNorwayForeign entities that plan to startbusiness activities in Norway, or on theNorwegian continental shelf, must useone of the types of organisation inparagraph 2 above and all registrationprocedures listed above must befollowed. However, if the enterprise isconducted in the course of constructionand installation work and is of a limitedduration (usually less than 6 or 12months), or if there is a hiring out ofpeople from the enterprise’s homecountry (see paragraph 6), no suchregistration is required. See, however,paragraph 13 for reportingrequirements to COFTA.

4. Accounting and reportingrequirementsDocumentation and recordsrequirementsThe following entities are obliged tokeep accounts according to theAccounting Act: all public and private limited liability companies partnerships (if the turnover exceeds NOK 5

million, if they have more than 5 employees inaverage or there are more than 5 partners) sole practitioners (if total assets exceed NOK

20 million or the number of employees inaverage exceed 20) finance institutions lawyers and law firms (required by industry

regulations) foundations, co-operations and legacies (only

if total assets exceed NOK 20 million or thenumber of employees in average exceed 20unless profit is the business objective) foreign entities, including branches, with

taxable business activities in Norway

The Board of Directors and the generalmanager (Corporate Executive Officer)are responsible for maintenance of theaccounting records and for preparationof financial statements. Thebookkeeping may be done abroad, butthe accounting material must bereturned to Norway for filing after theend of the accounting period.The Bookkeeping Act contains detailedbookkeeping procedures for entitiesobliged to keep accounts (see above).All enterprises obliged to submit atrading statement pursuant to the TaxAssessment Act or VAT returnspursuant to the VAT Act, also have abookkeeping obligation. The mostimportant provisions in the BookkeepingAct are:



Fundamental bookkeeping principlesBookkeeping, specification, documentationand storage of accounting information shalltake place in accordance with the followingfundamental principles:1. Clear and orderly accounting system

There shall be a clear and orderlyaccounting system that enables theproduction of statutory financial reportingand specifications, that is organised insuch a manner that the duty of disclosurecan be complied with

2. CompletenessAll transactions and financial activitiesmust be entered in the accounting system

3. SubstantialityEntries shall be the result of actual eventsor accounting valuations and shall pertainto the business of the enterprise

4. AccuracyInformation shall be entered and specifiedcorrectly and accurately

5. UpdatingInformation shall be entered and specifiedas often as required by the nature of theinformation and the nature and scope ofthe business of the enterprise

6. Documentation of entriesAll entries shall be documented in amanner that shows its justification

7. TraceabilityThere shall be a two-way control pathbetween documentation, specificationsand statutory financial reporting

8. StorageDocumentation, specifications andstatutory financial reporting shall be storedfor as long as reasonably required for thecontrol of the statutory financial reporting.Storage shall take place in a form thatenables the material to be read

9. SecurityThe accounting material shall beadequately secured against alteration,deletion or loss

10. Generally accepted bookkeeping practiceBookkeeping, specification, documentationand storage of accounting information shallcomply with generally accepted book-keeping practice

Specifications of statutory financialreportingFor each period with statutory financialreporting, and at least once every fourthmonths, the following must be prepared:bookkeeping specification, accountspecification, customer specification, supplierspecification, specification of withdrawals for

owners, partners or for own business,specification of sales to owners and partnersand specification of sales and other benefits toleading personnel.A specification of VAT and a specification ofbenefits/payments that must be included onpay-certificates and tax deducted must beprepared for each period with statutoryfinancial reporting.The Ministry shall in a regulation give moredetailed rules concerning the contents ofspecifications as mentioned in the first andsecond paragraphs.

Accounting systemThe accounting system shall be capable ofreproducing on paper specifications ofstatutory financial reporting as mentionedabove. The Ministry may in a regulation requireother forms of reproduction. Documentation ofthe accounting system shall be provided,describing the possibilities for control and howsystem-generated items can be checked,including relevant codes and fixed data, if thisis necessary to enable the entries to becontrolled. The Ministry may in a regulation setout requirements for the documentation ofunderlying electronic systems.

Bookkeeping and updatingEnterprises with a bookkeeping obligation shallenter all information necessary for thepreparation of specifications of statutoryfinancial reporting as mentioned above, and ofstatutory financial reporting. Entries shall bemade as often as required by the nature andscope of the business and the transactions.The bookkeeping must be updated by thedeadlines for statutory financial reporting, andat least once every four months. The Ministrymay in a regulation grant exemption from therequirement for updating every four months forenterprises with a bookkeeping obligationwhich have few transactions. Cashtransactions shall be registered daily, unless afixed cash system is used.

Bookkeeping currencyThe bookkeeping shall be in NOK, unless theMinistry decides otherwise in a regulation.

Rectification of entriesEntries shall not be changed or deleted afterthe deadlines mentioned above have expired.After these deadlines have expired,rectification shall take place in the form of new,documented postings. Such corrections shallbe made by the original posting being reversedin its entirety.



When information has been deleted, this shallbe clearly shown in the documentation orspecification.

Documentation of entriesEntries shall be documented. Documentationshall be issued with a content that is correctand complete, and it shall show the justificationfor the entries. The documentation shall not bechanged after it has been issued. If thedocumentation consists of several documents,the primary document shall contain referencesto the other documents.Entries shall be easy to follow from thedocumentation via the specifications to thestatutory financial reporting. Similarly, startingfrom the statutory financial reporting, it shall beeasy to find the documentation for theindividual entries. The documentation shall besystematised in a manner that enables itscompleteness to be checked.The Ministry may in a regulation stipulaterequirements concerning the format of thedocumentation.

Documentation of the balance sheetWhen preparing the annual accounts, allbalance sheet items shall be documentedunless they are insignificant. For enterpriseswith a bookkeeping obligation, this provisionshall apply correspondingly to the balancesheet items in the trading statement. TheMinistry may in a regulation provide moredetailed rules for the documentation of theindividual balance sheet items.

Language requirementSpecifications of statutory financial reporting asmentioned above and documentation of theaccounting system shall be in Norwegian,Swedish, Danish or English unless the Ministryin a regulation or an individual decisiondecides otherwise.

StorageThe following accounting material is subject toa storage requirement:1. annual accounts and other statutory

financial reporting, the annual report andthe auditor's report

2. specifications of statutory financialreporting as mentioned above

3. documentation of entries and deletedentries, of the accounting system and ofthe balance sheet

4. numbered letters from the auditor5. agreements concerning the business, with

the exception of agreements of minorimportance

6. correspondence that provides importantadditional information in connection withan entry

7. outgoing packing slips or correspondingdocumentation available on paper at thetime of delivery

8. price lists that are required to be preparedby act or regulation

Accounting information as mentioned in thefirst paragraph, subparagraphs 1 to 4, shall bestored in Norway for ten years after the end ofthe financial year. Accounting material asmentioned in the first paragraph,subparagraphs 5 to 8, shall be stored inNorway for three years and six months afterthe end of the financial year. Entries whichwere initially electronically available shallremain electronically available for three yearsand six months after the end of the financialyear.Accounting material that is subject to a storagerequirement shall be stored in an orderlymanner and shall be adequately securedagainst destruction, loss and alteration. It shallbe possible to present the accounting materialto public control authorities during the entirestorage period in a form that enables it bechecked. The accounting material shall beavailable in readable form and shall becapable of being printed on paper during theentire storage period. The Ministry may in aregulation or individual decision grantexemption from the provisions in the secondparagraph concerning storage location,storage period and electronic availability. Theaccounting material must be transferred toNorway for storage, within 1 month after theapproval of the statutory accounts but no laterthan 7 months after the year end, if thebookkeeping is done abroad.

The Ministry has issued detailedregulations which supplement theprovisions of the Accounting Act andstipulate further requirements. Thefollowing is included: requirements for statutory specifications requirements for updating of the

bookkeeping and bookkeeping in a foreigncurrency documentation of bookkeeping entries

(including contents of sales documents) documentation of the balance sheet storage requirements special rules for industries and sectors

(building and construction, taxis, hair carebusinesses, hairdressers and beauticians,



service industries, businesses servingalcoholic beverages, hotels, foreigncompanies and persons with business on theNorwegian Continental shelf and dealers insecond-hand goods, works of art, collectors’items and antiques)

See Appendix G for a summary ofchallenging requirements in thebookkeeping regulations.

Accounting periodCompanies must have a 31.12 yearend, but a subsidiary of a foreigncompany with a differing accountingyear may adopt its parent's year endand a non 31.12 year end may be usedfor companies with seasonal variations,but only if the information value of theaccounts is increased. No precedingapproval is required. The reasons for anon 31.12 year end must be reported tothe Register of Annual CompanyAccounts (Regnskapsregisteret).

Local accounting standards/principles and differences to IFRSNorwegian generally acceptedaccounting principles (NGAAP) aretransaction oriented, based on a set offundamental accounting principles,rather than the balance sheet basedconceptual framework of IFRS. Thefinancial statements are preparedbased on the principle of “true and fairview” and the statements must complywith the valuation rules (see below)and the fundamental accountingprinciples within the Accounting Act.Ten following ten fundamentalaccounting principles must beapplied (with due regard to cost/benefitconsiderations and practicability):1. the transaction principle

transactions shall be recognised at thevalue of the consideration at the time ofthe transaction, normally at the time of thetransfer of risk and control

2. earned incomeincome is recognised when earned,normally when a sales transaction takesplace

3. matchingcosts shall be expensed in the sameperiod as the related income

4. prudenceis reflected by using the lower of cost ormarket in the valuation of assets and inrecognition of unrealised losses

5. hedge accountingwhen an unrealised loss is hedged, theunrealised loss shall not be recognised

6. accounting estimatesuncertain items shall be stated at theestimated value based on the informationavailable at the time when the accountsare prepared. The estimates shall be madewithout excessive prudence

7. the all-inclusive income conceptall income and expenses shall be includedin the income statement and the effect ofchanges in accounting policies andcorrection of prior periods’ errors shall becharged to equity

8. application of accounting policiesthe annual accounts shall be preparedaccording to consistent accounting policiesapplied consistently over time

9. going concernthe annual accounts shall be prepared withthe assumption of the enterprise as agoing concern insofar as it is not likely thatthe enterprise will be wound up

10. good accounting practicematters not directly mentioned in theAccounting Act should be dealt with incompliance with good accounting practice

The enterprises listed on the OsloStock Exchange (OSE) have to complywith the various listing requirementsincluded in the OSE regulations(Børsreglementet). In addition, theNorwegian Securities and ExchangeCommission (Kredittilsynet) issuesaccounting and reporting requirementsrelevant to the enterprises within theirjurisdiction, including financialinstitutions.



Companies listed on the OSE mustuse IAS/IFRS-principles in theconsolidated financial statements(group accounts) and in the parentcompany’s annual accounts. Non-listedcompanies’ financial statements(annual accounts) may be preparedusing IAS/IFRS-rules or they can beprepared using NGAAP.

The Accounting Act permits asimplified application of IFRS (“IFRSlight”) using IFRS valuation principles(with a very limited number ofdivergences, including treatment ofdividends and group contributions) butwith less stringent note disclosures.

The main differences between NGAAPfor non-small companies and IFRS-standards are (see below fordifferences in NGAAP for non-smalland small companies):

General issuesForm and elements of financial statements A statement of recognised gains and losses

is not required Listed enterprises are required to present

income statements and statements of cashflows for the current and preceding twoyears, and balance sheets for the currentand preceding year The exemptions from preparing consolidated

financial statements are more limited thanunder IFRS

Statement of cash flows Cash and cash equivalents do not include

bank overdrafts Dividends paid are classified within financing

activities Dividends received, taxes and interest are

classified within operating activities If a cash receipt or payment relates to more

than one type of activity, it is classifiedaccording to the predominant source of cashflow for the item

Basis of accounting NGAAP is based on a set of transaction

oriented fundamental accounting principlesrather than a balance sheet basedconceptual framework

The opportunity to carry assets and liabilitiesat fair value is more limited than under IFRS The historical cost basis is adopted for most

items in the financial statements

Consolidation A subsidiary may be omitted from

consolidation if its activities are significantlydissimilar from those of the parent If a subsidiary’s financial statements are not

as of the same date as those of the parent,an interim report must be prepared Uniform accounting policies must be used

throughout the group Minority interests are computed based on

fair values (except goodwill) Minority interests are recognised as a

separate component of equity

Business combinations The cost of acquisition and the valuation of

the acquired assets and liabilities mayalternatively be determined at the “date ofagreement” The criteria for using uniting of interests

accounting are stricter than under IFRS Registration and issue costs of equity

securities are deducted from equity Internal costs are not included in the cost of

acquisition If an acquisition is structured as a legal

merger, adjustments to goodwill cannot bemade after the end of the accounting periodduring which the transaction took place Deferred tax relating to fair value

adjustments may be discounted Business combinations between enterprises

under common control or with identicalowners are accounted for at book value

Foreign currency translation Monetary items may be measured in foreign

currency at the balance sheet date beforebeing translated using the exchange rate atthe balance sheet date The financial statements of a foreign entity in

a hyperinflationary economy may bemeasured as if its functional currency wereits parent’s reporting currency

Prior period adjustments and otheraccounting changes Adjustments in the current period of

accounting policy changes and materialerrors without restating comparatives are notallowed



Change of accounting estimate fordepreciation may be recognised as if thenew useful life had always been used

Events after the balance sheet date Proposed dividends are recognised in the

balance sheet as a short term liability

The balance-sheetGeneral topics Equity must be separated between paid-in

and earned capital The current portion of long-term debt may be

classified as current or non-current There are no specific offset rules

Property, plant and equipment Dismantling and removal costs can be

accrued over the estimated life of an asset,or accounted for through depreciation Interest must be capitalised as part of the

cost of an asset The residual value of an asset is usually not

considered when calculating the depreciableamount The cumulative effect of change in the useful

life of an asset may be recognised in thecurrent year The cost of periodic maintenance may be

accrued over the period betweenmaintenance-work Re-measurement is not allowed Compensation received is netted against the

related loss or impairment

Intangible assets Own research and development costs may

be expensed as incurred or capitalized Revaluation is not permitted in most

instances There is no requirement for certain intangible

assets to be tested annually for impairment.The assets are depreciated

Investment property Investment property is accounted for as

property, plant and equipment, and re-measurement to fair value is not permitted Investment property is not shown on a

separate line

Investments in associates and jointventures There is no distinction between jointly

controlled entities, jointly controlled assetsand jointly controlled operations

Financial instruments, including hedging With the exception of certain financial

instruments held for trading, accountingpractice for financial instruments varies In order to be carried at fair value, financial

instruments, including derivatives, have to beheld for trading and meet certain criteria The accounting for embedded derivatives

varies The “held-to-maturity accounting method” is

not allowed under NGAAP (except for debtsecurities held by insurance enterprises) With limited exceptions, recognised changes

in fair value must be recorded in the incomestatement In many cases an impairment loss is not

recognised unless it is other than temporary There are no specific rules for de-recognition

of assets and practice varies Classification of a financial instrument as a

liability or equity generally follows the legalform of the instrument Split accounting for compound financial

instruments is rare Hedge accounting is applied more freely

than under IFRS and accounting practicevaries, although changes in the fair value ofhedging instruments normally are deferred In some cases special rules apply to banks

and insurance enterprises

Inventories LIFO is not permitted

Biological assets There are no specific rules There is no reference to biological assets

under NGAAP, and accounting practice mayvary In any case, biological assets are not

allowed to be stated at fair value Biological assets are not shown on a

separate line

Equity A reconciliation of changes in equity is not

required to be presented as a separatestatement. A note disclosure is sufficient Dividends are recognised as a liability in the

period to which they pertain Dividends declared are presented on the

face of the income statement The cost of issuing equity securities in a

business combination is debited directly toequity



Provisions Anticipated gains from the expected disposal

of assets can be deducted from arestructuring provision if the disposal is anintegral part of the restructuring plan The unwinding of the discount need not be

presented as a component of interest A provision for decommissioning may be

accrued over the life of the underlying assetor accounted for through depreciation The cost of repairs and maintenance may be

accrued over the period betweenmaintenance-work NGAAP quantifies the various levels of

possibility

Deferred tax All temporary differences are recognised Certain deferred taxes may be discounted There are some specific requirements for

industries such as oil and gas, powergeneration and shipping

The income statementGeneral topics The operating result (profit/loss) is shown on

a separate line Appropriations of profit/loss are shown on

the face of the income statement There is no specific guidance on offsetting

Revenue Dividend receivable from subsidiaries may

be accounted for when shareholder approvalis probable The principle of probability is not clearly

defined

Government grants A grant that funds the excess of an

investment’s cost over its fair value must beoffset against the cost of the investment,otherwise it should be carried separately All grants, including “hidden” grants like

interest free loans, must be booked basedon the value at the time of transaction

Employee benefits and share-basedpayments A long-term risk-free interest rate may be

used to discount employee benefit liabilities There is no guidance on accounting for multi

employee benefits and practice may vary Vested post service costs should be spread

on a straight line basis

For options granted to employees, anexpense based on the intrinsic value at thedate of grant should be recognised over thevesting period

Interest expense Interest must be capitalised on qualifying

current assets, but can be expensed for longterm assets The enterprise’s weighted average interest

cost may be used to capitalise interest

Income tax There is no specific guidance on accounting

for withholding taxes on income

Extraordinary and exceptional items Extraordinary items are presented separately

before income taxes and the attributableincome tax is presented on a separate line

Special topicsLeases There is no guidance on accounting by a

lessor and practice may vary The leased asset is always recorded at the

present value of the minimum leasepayments In discounting the minimum lease payments

there is a choice between the interest rateimplicit in the lease and the lessee’sincremental borrowing rate There is no guidance on separate

classification of linked transactions involvingbuildings and land

Earnings per share Basic and diluted EPS are presented based

on income both before and afterextraordinary items The majority and minorities’ part of profit is

included in income

Related party transactions Disclosures apply only to listed and other

enterprises with “considerable publicimportance” Information about losses on receivables and

allowance for doubtful debts is not required Pension plans for employees are not defined

as related parties



Financial instruments disclosure Disclosure requirements are differentiated

between large, small and other enterprisesas well as financial institutions, the latterthrough separate regulation The level of financial market risk disclosure

varies

Accompanying financial and otherinformation A Directors’ report containing specified

information is required There is no requirement to show prior period

amounts in the notes

Interim financial reporting A balance sheet for the corresponding

interim period must be shown

Differences in NGAAP betweensmall and non-small companiesSmall companies may under NGAAPuse less stringent accounting andvaluation principles and less detailednotes. A Norwegian accountingstandard (NRS 8) has been preparedfor small companies by the NorwegianAccounting Standards Board (NorskRegnskapsstiftelse). A company isdefined as small if it two of thefollowing three criteria is met: less thanNOK 70 million in revenue, less thanNOK 35 million of total assets andfewer than 50 employees.

The main differences in NGAAPbetween small and non-smallcompanies are:

Form and content of financial statements(see below)

Accounting principlesSmall companies may choose not to follow allrequirements within the earned incomeprinciple, the matching principle and the hedgeaccounting principle (see above), if this is inaccordance with the relevant accountingstandards.

The balance sheetSmall companies may: use only variable production cost in

valuation of inventories (excluded costsmust be expensed)

choose not to capitalize the cost ofdeveloping intangible assets (costs can beexpensed) choose not to realize a net deferred tax

asset (but a net deferred tax liability must beaccounted for) value listed shares and bonds that are part

of a trade portfolio at the lower of cost ormarket choose the completion-of contract-method

for long term manufacturing contracts choose not to account for future pension

obligations covered by insurance companiesas liabilities (yearly premiums paid caninstead be expensed) use net book values of assets and liabilities

when accounting for mergers anddemergers

The income statementSmall companies may: take total sales proceeds, including payment

for future service- and guarantee costs, toincome with an accrual for estimated futurecosts choose not to account for leasing contracts

of financial nature as liabilities (costs mustbe expensed) take the effect of changes in accounting

principles to income as extraordinary items

take the effect of prior years’ corrections toincome as extraordinary items

choose not to expense share basedpayments to management and employees

The notes

Number of mandatory notes is lower and thecontent of the notes is less detailed for smallcompanies. Mandatory notes (see below) andother notes that must be included if they arenecessary to assess the financial position andthe result of the company, are listed in theAccounting Act. An ASA must disclosesalaries, share options and other remunerationto the general manager and key executives.

Associations and societies, includingfoundations, with a non-profit/not businessobjective, may decide to use less stringentaccounting/valuation principles and a differinglayout of the income statement and thebalance sheet, if such principles are inaccordance with the applicable accountingstandard.



Valuation rulesValuation rules for current assets arebased upon the lower of cost, at thetime of the transaction, or market (netrealizable value) and for fixed assetsthe cost of acquisition. Costs forproduction of goods and fixed assetsinclude direct and indirect variableproduction costs and productionoverheads, including borrowing costs,based on the FIFO-method. Obsoletegoods must be written down toestimated future sales prices. Long-term production contracts shall betaken to income according to theprogress of the project (the percentageof completion method). Smallcompanies may use the completedcontract method. Fixed assets aredepreciated in accordance with areasonable depreciation plan if theuseful life is limited. Market-basedfinancial current assets are exemptedfrom the lower of cost or marketprinciple. Listed shares and bonds thatare part of a trade portfolio, and thatare bought and sold on a continuousbasis, shall be valued at market value.Monetary items denominated in aforeign currency shall be translated atthe closing rate. Other assets in foreigncurrency shall be valued at the lower ofcost or market.Research and developmentexpenditure may be expensed ordeferred to future periods if they areoffset by expected future income.Deferred expenditure must be writtenoff over the period in which the costsare expected to generate income.Purchased research and developmentmust be capitalized. Goodwill (theundefined difference between the pricepaid for an acquired company and theaggregate net value of identifiableassets less liabilities) shall follow thegeneral valuation rules for fixed assets.If the depreciation period is longer than

five years, the basis for a longerdepreciation period must besubstantiated and disclosed in thenotes.

The equity method and proportionateconsolidation must be used in theconsolidated accounts. Mergers anddemergers must be considered asequity transactions.

Equity requirements and limitationsof dividendsA limited liability company (AS andASA) is required at all times, tomaintain a sufficient equity for theconduct of the business, consideringthe risks involved in and the nature ofthe company’s activities. Market valuesin excess of book values of assetsqualify as equity and liabilities notbooked, if any, such as pensions andpossible future costs, must bededucted. The sufficient equity level isnot defined in the Companies’ Act andmust be decided upon, documentedand followed up by the Board ofDirectors based on individualcircumstances. If more than 50% of theshare capital is lost, the Board ofDirectors must formally consider if theequity is sufficient or if additional equityis required. Additional equity may beobtained from issuing new sharecapital, conversion of group payablesto share capital, a subordinated loan ora guarantee from the parent companyto secure adequate financing.

Distributions of interim dividends(additional distributions during theyear), are based on and are restrictedby last years’ audited statutoryaccounts.

The year’s profit after tax and prioryears’ retained earnings, reduced byloans to shareholders (if not agreed inwriting to be covered by dividends



distributed), goodwill, capitalizedresearch and development costs,purchases of own shares and netdeferred tax assets, may be distributedas dividends. However, there is arequirement that total equity, afterdeduction of the years’ dividend,should be a minimum of 10% of totalassets at year-end. If the sufficientequity level is higher than the 10%requirement, this will be the effectiveequity requirement.

The remaining equity after distributionof maximum dividends as detailedabove, except for the minimum sharecapital, see paragraph 2, and the totalof loans to shareholders (if not agreedin writing to be covered by dividendsdistributed), goodwill, capitalizedresearch and development costs,purchases of own shares and netdeferred tax assets, may be distributedto the shareholders by informing thecreditors through a written note to TheRegister of Business Enterprises.However, the requirement ofmaintaining a sufficient equity for theconduct of the business at all times willusually make such a distributionimpossible, unless the company hasmade a substantial profit after the yearend.

Form and content of financialstatements (annual accounts)The financial statements shall give afair presentation of the assets andliabilities, financial position and resultsof the company and the group. Theaccounts must be prepared within sixmonths after the year-end in theNorwegian language and in NOK,unless otherwise allowed by theMinistry. The statements must showprevious years’ corresponding figuresand include an income statement,balance sheet, cash flow statement (ifthe company is not small) and notes.

The format of the income statement andthe balance sheet is prescribed by theAccounting Act. Companies maypresent the income statement byfunction (and not analysed by the typesof revenues and costs) and the balancesheet by liquidity (and not thecurrent/non-current format), but only ifthe information value is increased.

The income statement must discloseoperating revenues, operating costs,the operating result, financial incomeand costs, the result beforeextraordinary items, extraordinaryitems, the years’ taxes and net incomefor the year. The tax charge shall besplit into tax on ordinary result and taxon extraordinary items.

Assets are divided into fixed andcurrent assets. Fixed assets areacquired with the intention ofpermanent ownership or to be used inthe business. Assets that fall within therevenue cycle are current assets. Debtis divided into provisions for liabilities(that include incurred costs and non-current liabilities where the estimatedvalue is uncertain, inclusive of pensionliabilities and deferred tax), other non-current liabilities and current liabilities.Equity is divided into paid in capitaland retained earnings.

The Accounting Act has numerousnote disclosure requirements.Mandatory note disclosure is less strictfor small companies and listedcompanies are subject to moreextensive requirements from the OsloStock Exchange. There is a generalprovision stating that the notes shalldisclose matters which are necessaryto assess the financial position and theresult of the company. In particular, theaccounting policies shall be disclosed.Notes may be omitted if they are notmaterial to the assessment of the



financial position and result of thecompany. Listed companies mustdisclose information aboutshareholders who control 10% or moreof voting powers. Some notes must bemade irrespective of materiality:number of shares issued, shareholdersand treasury stock, number ofemployees, remuneration to executivesand loans and security pledges infavour of executives and shareholders.A parent company must prepareconsolidated financial statements forthe group. If the parent company issmall, a consolidated statement is notmandatory.

The Board of Directors and the generalmanager must, as a separatedocument, prepare an annual report inthe Norwegian language with thefollowing minimum information: thenature of the business and where it isconducted, a true and fair summary ofthe company’s result, position andfuture development, including the mainrisks and uncertainty factors facing thecompany, information on research anddevelopment activities, comments onexpected future development (if thecompany is not small), information onfinancial risks, confirmation of thegoing concern assumption, proposedallocation of the profit / coverage of theloss, information about the state ofequality between male and female,information about the internal workingenvironment and about conditionswhich may affect the externalenvironment.

The financial statements and groupaccounts must be approved by theshareholders at the company's annualgeneral meeting. The annual accountsand the annual report must be signed byall members of the Board of Directorsand by the general manager. If amember has objections to the accounts,

the person shall sign with anendorsement of the qualification(s)made and further information shall begiven in the annual report.

Public information / filingLimited liability companies must file thefinancial statements (annual accounts)with The Register of Annual CompanyAccounts (Regnskapsregisteret) withinone month after the annualshareholders’ meeting, and within 7months after the year end if filed onpaper (8 months after the year end iffiled electronically). Companies with ayear-end between January 1 and June30 must file the financial statementswithin February 1 the following year(March 1 if filed electronically) andcompanies with a year-end betweenJuly 1 and December 31 must file thefinancial statements within August 1the following year (September 1 if filedelectronically). Companies withtemporary activities in Norway oractivities on the Norwegian ContinentalShelf must file the form “Extract ofaccounts” with the Central Office -Foreign Tax Affairs (COFTA) if theyearly turnover exceeds NOK 5 million.

Filing after these dates results inpenalties; NOK 860 for each week thefirst 8 weeks, NOK 1.720 for eachweek the next 10 weeks and NOK2.580 for each week the last 8 weeks;a total of NOK 44.720 after 26 weeks(penalties at December 2010). TheRegister is starting liquidationproceedings if the filing is not donewithin 26 weeks after the above filingdates. The file information is public andwill be provided to anyone on request.Anyone is also entitled to study thecontents of the documents at thecompanies’ office, but only if theaccounts are not available from theRegister.



External interim reporting is notrequired unless the company is listedon the Oslo Stock Exchange. Somefinance companies must, however,issue interim reports to the Banking,Insurance and Securities Commission(Finanstilsynet).

Branches, partnerships (includingsilent partnerships) and other entitiesthat are obliged to keep accounts, seeabove, must file the accounts within 7months after the year end. Theaccounts of a branch of an EU/EEA–company are not publicly available,neither at the Register nor at thebranch office. However, to avoidpublication of the branch accounts, theannual accounts of the foreign “parent”company must also be filed, inNorwegian, Danish, Swedish orEnglish, and the accounts of the“parent” company are publiclyavailable. Entities with limited businessactivities in Norway and activities onthe Norwegian continental shelf, thatare registered with the Central Office –Foreign Tax Affairs (COFTA), mustalso file an “Extract of Accounts” with adetailed income statement appendedto the tax return.

LiquidationThe resolution to dissolve a publiclimited liability company or a privatelimited liability company must be takenby the annual general meeting ofshareholders and requires a two thirdmajority. The resolution is made publicby a report to The Register of BusinessEnterprises (Foretaksregisteret) and byadding “under dissolution/ underliquidation” on the company’sletterhead. The Register will publishthe resolution and inform the creditorsto report any objections to thecompany within two months. Upon finalsettlement of the liabilities andsubsequent distribution to the ownersof any remaining assets, auditeddissolution accounts must bepresented to the annual generalmeeting of shareholders. When theaccounts are approved by the generalmeeting, it shall be reported to TheRegister of Business Enterprises(Foretaksregisteret) that the companyhas been wound up.

A liquidation of a partnership must beadopted by the partnership meeting.There are no special rules for theliquidation of other corporations.

5. Audit requirements and standardsNational basis for audit / statutoryaudit requirementsAll limited liability companies are subjectto a statutory audit if the turnoverexceeds NOK 5 million, total assetsexceed NOK 20 million or the averagenumber of employees exceeds 10. Allparent companies are subject to anaudit. All law firms must be auditedregardless of size and organisation.

Branches of a foreign company must beaudited if the turnover exceeds NOK 5million. Partnerships must be audited ifthe turnover exceeds NOK 5 million, ifthe number of employees exceeds 5 orthe number of partners exceeds 5. Solepractitioners must be audited if theturnover exceed NOK 5 million andassets exceed NOK 20 million or if theyhave more than 20 employees.



Appointment of auditorsThe statutory auditor is appointed atthe shareholders’ Annual GeneralMeeting. Listed companies mustappoint a State Authorized PublicAccountant, while all other companiesand organisations may choosebetween the two categories of auditorsin Norway; Registered PublicAccountant and State AuthorizedPublic Accountant. The RegisteredPublic Accountants have 3 years andthe State Authorized PublicAccountants have 5 years ofspecialized education at the universitylevel within audit, accounting, tax, lawand other business related topics.

Local auditing standards anddifferences to internationalstandardsThe Norwegian Institute of PublicAccountants (Den norskeRevisorforening (DnR)) has acceptedand translated all auditing standardsissued by the International Federationof Accountants (IFAC). It is mandatoryto follow all standards on all auditassignments and all internationalauditing standards (ISA’s) are thusadhered to. The standards arenormally introduced in Norway with adelay of 6-9 months because of thetime required for translation andapproval procedures.

IndependenceA statutory auditor cannot provideconsulting or other services if suchactivity is liable to influence or raisedoubts about the auditors’independence and objectivity. Theauditor cannot provide services that fallunder the management and inspectionduties (see “Management”-section inparagraph 3) of the company subject toa statutory audit.

Reporting and audit opinionThe following must be reported innumbered letters to the company’smanagement:1. inadequacies in orderly and proper

registration and documentation ofaccounting information

2. errors and defects in the organisation ofand control of asset management

3. fraud and errors that may causemisstatements in the annual accounts

4. factors that may lead to liability formembers of the board of directors,corporate assembly, committee ofshareholders’ representatives, or thegeneral manager

5. reason(s) for missing signatures inconjunction with confirmations provided tothe public authorities pursuant to law orregulations, and

6. the reason(s) for resigning from the auditengagement

The reasons for electing new auditorsoutside the shareholders’ AGM mustbe reported to The FinancialSupervisory Authority of Norway(Finanstilsynet).

The audit opinion (see a specimenaudit opinion in Appendix F) mustinclude a conclusion whether thecompany’s management has fulfilledits duties to ensure orderly and properregistration and documentation ofaccounting information and whetherthere are factors that may lead toliability for members of the board ofdirectors, the corporate assembly, thecommittee of shareholders’representatives or the generalmanager. The auditor must alsoconclude whether the information inthe directors’ report concerning theannual accounts, the going concernassumption and the proposal for theallocation of the profit/coverage (carryforward) of the loss comply with lawand regulations and whether theinformation is consistent with theinformation in the annual accounts.



Quality controlDnR, under the public oversight of TheFinancial Supervisory Authority ofNorway (Finanstilsynet), performsquality control reviews using qualifiedpractitioners. All auditors are visitedonce every 5 years. The reviews meetall minimum requirements of the 2000”Commission Recommendation onquality assurance for the statutoryaudit in the European Union”. Theresults of the reviews are reported to,and the reviews are based on a controlplan approved by Finanstilsynet (thesupervisory body of Norwegianauditors that has the overallresponsibility for ensuring compliancewith the rules of professional standardsrelating to audit and ethics andespecially to ensure the independenceand objectivity of statutory auditors and

audit firms). Finanstilsynet also sendstheir own checklists to all audit firmsevery second year to confirmcompliance with standards, laws andregulations and they do their own risk-based monitoring of auditors and visitselected firms when deemednecessary.

Mandatory certificationsAn auditors’ certification is required inconnection with changes of the sharecapital, other capital changes,mergers/de-mergers, the annual taxreturn and the year-end salary reports(see “Filing and signing of tax returns”in paragraph 6). Companies subject toa statutory audit must present anauditor’s report on the annualaccounts.

6. Corporate taxation

Tax rates and tax basisNorwegian domiciled companies aretaxable in Norway for all their incomeregardless of where the income isearned. However, this may be modifiedthrough tax treaties that overruledomestic law, see paragraph 11 below.Taxable income is subject to acorporate income tax of 28%. The taxrate is identical for public limited liabilitycompanies, private limited liabilitycompanies and branches of a foreigncompany. Special rules apply topartnerships and sole practitioners (seebelow), shipping activities (seeparagraph 7) and petroleum companies.There is no company tax on net assets.

Residence, territoriality andpermanent establishmentCompanies are resident in Norway fortax purposes if they are incorporated inNorway and have their statutory seat inthe country. Furthermore, a companyincorporated outside of Norway isresident for tax purposes if it has itseffective management, determined bythe place of the day to day businessdecision making, in Norway.

Non-resident companies doing businessin Norway through a permanentestablishment (see definition inparagraph 11) are subject to tax on allincome attributable to or received fromsuch a permanent establishment. Thereis, however, no requirement for apermanent establishment in order for anactivity to be taxable in Norway.Business activity performed in Norway



and on the Norwegian continental shelfis generally liable to taxation inNorway. The enterprise may, however,be exempt from tax according to thetax treaty between Norway and theenterprise’s home country. This isnormally the case if the enterprise isconducted in the course of constructionand installation work and is of a limitedduration (usually less than 6 or 12months), or if there is a “hiring out” ofpeople from the enterprise’s homecountry. The Norwegian company mustsupervise, direct or control the way thework is performed, the person hired out(the foreign company) must not beresponsible for or have the risk for thecontract profit, the payment must bebased on hours used and the personhired out must use his own office, toolsand materials for the work to satisfy thecriteria for “hiring out”. No singlecriterion is, however, considereddecisive. The tax authorities willexamine the assignment as awhole before a decision is reached.

Calculation of net taxable incomeand tax valuation principlesTaxable income is based on net incomein the financial statements (annualaccounts). However, for certain itemsthere are specific tax rules that takeprecedence over the valuation rules foraccounting purposes, see above. Thereare also specific provisions for certainbusinesses such as banking, insuranceand the oil and gas industry. Theseprovisions are not dealt with in thispublication. The most importantdifferences between the tax principlesand the accounting principles are:

InventoriesReduction in the value from write down forobsolescence is not tax deductible until the losshas actually been incurred through sale or otherrealization.

Accounts receivables

Bad debt provision for accounting purposes isreversed for tax purposes. However, a deductionof 2% of gross trade receivables at year end isallowed for newly established enterprises (thefounding year and the following two years). Forother enterprises a tax deduction is calculatedbased on previous years’ realized losses andthe year-end gross trade receivables.Irrecoverable losses of trade receivables frombankruptcies are tax deductible. An item is alsoconsidered lost for tax purposes if it is not settledwithin six months after the due date if at leastthree reminders have been presented.

Fixed assets – depreciation andrealization of profit/lossFixed assets including acquired goodwill are, fortax purposes, depreciated according to thedeclining balance method based on cost prices(items with cost below NOK 15.000 and with anestimated economic life of less than 3 years areexpensed for accounting and tax purposes). Thevarious groups of fixed assets are subject todifferent depreciation rates, see Appendix B.The rates may be varied yearly between 0% andthe maximum percentage allowed. The salesproceeds from the realization of assets in groupsA-D, see Appendix B, are deducted from theaggregated tax balance of the items in thegroup. The taxable profit/loss is calculated byway of changes in the balance on which the taxdepreciation is calculated. Profit and loss fromthe realization of assets in groups E-I, seeAppendix B, is transferred to a profit and lossbalance. From this balance 20% is takenannually to taxable income as either a deductionor an addition. Land, dwellings and works of artare normally not eligible for depreciation.

Intangible assets (including capitalizedcosts of web sites and accountingsystems)Write-down for tax purposes may only be done ifand when there is a material reduction in thevalue. Intangible asset are depreciated over theestimated economic life for accountingpurposes. A right limited in time may bedepreciated using the straight-line method overthe period for which the right exist.

Assets and liabilities in foreign currencyUnrealized losses on long-term monetaryassets/liabilities in foreign currency are netdeductible, i.e. all currency losses areconsidered on an aggregate basis. Netunrealized gains are, however, taken to taxableincome in so far as they lie within the range ofpreviously deducted losses.



Long term manufacturing contractsThe completion of contract method is used fortax purposes, even if the percentage ofcompletion method is used in the financialstatements. Only direct costs related to theprojects are capitalized.

Inter-company transactions and transferpricingInter-company transactions must follow thearms-length principle and they must besufficiently documented to be tax deductible.Companies may deduct payments for directpurchases, shared expenses and managementfees to affiliates from taxable income if they donot exceed normal cost. The income may,however, be estimated by the tax authorities if itis probable that the income is reduced due todirect or indirect connection betweencompanies.

There are specific rules introduced on transfer-pricing methods, transfer-pricing documentationand reporting requirements, based on theprinciples laid down in the OECD TransferPricing Guidelines. The reporting requirementsare effective from 2007 and the documentationrequirements from 2008.

Losses on intercompany receivables are not taxdeductible effective from October 6, 2011.Losses on trade receivables are not affected.

Accruals according to “generallyaccepted accounting principles”Accruals for future estimated/anticipated costs(including classification reserves for vessels,anticipated losses on contracts and reserves tomeet expected declines in inventory prices) are,where it is probable, i.e. more likely than not thata future event will occur, not deductible for taxpurposes until the loss is actually realized.However, accruals for costs related to futureevents not involving uncertainty are taxdeductible.

Non-deductible expensesExpenses incurred for entertainment and giftsand losses incurred in circumstances not directlyconnected with activities within the businessobjectives of the company, are normally not taxdeductible.

The “cut-through” principleTransactions that have no other purpose than toavoid tax may be disregarded. Formalities are insuch an event disregarded and tax is levied onthe basis of what is assumed to be the correctstate of affairs.

Dividends and gains and losses onrealization of sharesA tax exemption model is applied to Norwegianresident private and public limited liabilitycompanies, other companies of the samestanding for tax purposes and Norwegian stockinvestment funds, associations, institutions,estates in bankruptcy and municipal and state-owned companies. Only the real beneficialowner (the company that can claim and istaxable for the dividend/gain) is covered. Thetax exemption model also applies to suchforeign companies and other entities thatcorrespond to the Norwegian companiescovered. However, companies resident in lowtax countries (as defined by the tax authorities,see Appendix C) outside the EU/EEA-area andcompanies resident outside the EU/EEA-areawhere the Norwegian ownership/control is lessthan 10%, at the time when gains/losses arerealized or dividends declared, are not part ofthe tax exemption model.

For companies within the tax exemption model,dividends have not been taxable in thereceiving Norwegian company after March 26,2004. 3% of the dividends are, however,taxable with a tax rate of 28% with effect fromOctober 7, 2008. Dividends are not adeduction against taxable profit in the issuingcompany (inside and outside of the model).Gains on realization of shares have not beentaxable and losses on realization of shareshave not been tax deductible in Norway afterMarch 26, 2004. 3% of the net gain (afterdeduction of losses, if any) is, however,taxable with a tax rate of 28% with effect fromOctober 7, 2008.

The foreign company (in the EU/EEA-area andin other countries) must, however, effectivefrom 2008, document that it is actuallyestablished and effectively managed in andthat it carries out factual long term commercialactivities in the country of registration for noNorwegian withholding tax to be deducted.Dividends from and gains on realization ofshares in companies in low tax EU/EEA-countries (see definition in Appendix C) are nottaxed in Norway if the foreign company isactually established in and effectivelymanaged in and carries out factual long termcommercial activities in, the country ofregistration (effective from 2008). Dividends toforeign companies outside the EU/EEA-area aresubject to withholding tax, see paragraph 11.

Distribution of liquidation proceeds, in the year ofthe final dissolution of a company, is not subject



to withholding tax. The net proceeds are nottaxable if the shareholder is a company withinthe tax exemption model. A personalshareholder is taxable by 28% after adjustmentof the net with the value of retained and taxedearnings during the period of ownership.

Royalties and technical assistanceRoyalty received is taxed as ordinary incomewith tax credit for any withholding taxes paidabroad. Royalty expenses determined on anarm’s-length basis are normally deductible.However, the Norwegian tax authorities canobject, and reclassify excessive amounts todividends, if Norwegian companies pay higher-than-normal fees for royalties or technicalassistance. But there is neither a legal maximumnor a strict definition of a normal royalty. There isno withholding tax applicable to “acceptable”royalty payments.

Interest, shareholders financing and thincapitalisationInterest income received is taxed as ordinaryincome. Interest expenses are generally allowedas deductions against income. Interest chargeswithin a group must fulfil the arms-lengthprinciple. Since non-residents are not liable towithholding tax on interest payments on loansgranted from abroad to Norway, which are notconsidered as capital investment assimilated tothe debtor’s equity, financing a company throughdebt rather than through equity may be alucrative option in some cases. According to thegeneral arm’s-length principle in Norway,interest on intercompany debts is not deductibleto the extent the ratio between interest-bearingintercompany debt and equity exceeds whatwould have been accepted by a third-partylender if other circumstances remainunchanged. When deciding on the minimumdebt-equity ratio needed, one must take intoaccount specifics in the industry and thecompany concerned. No further regulations orguidelines have been issued by the taxauthorities on the debt-equity ratio. However, asrule of thumb, a ratio of 4 to 1 seems to beaccepted as a kind of safe harbour.

Group contributions (konsernbidrag)Although companies within a group are taxed asseparate companies and consolidated taxreturns are not permitted, contributions withinthe year’s taxable profit may be made for taxpurposes between domestic limited liabilitycompanies and companies of the same standingas a limited liability within a group if the totaldirect and indirect ownership exceeds 90%.Contributions are tax deductible in the company

making the contribution and taxable in thecompany receiving the contribution. 28% of thegroup contribution is classified as taxes in theincome statement and the remaining 72% of thegroup contribution is transferred directly to/fromequity in the statutory accounts.

Liquidation, mergers, demergers andtransfer of assetsLiquidationA liquidation is, for tax purposes, regarded as asale of the liquidated company’s assets. For theshareholders the liquidation proceeds areregarded as sale of shares.

MergersA merger (the transaction by which thetransferring company ceases to exist after atransfer of all of its assets and liabilities to thereceiving company) is, for tax purposes,regarded as a liquidation. For the shareholdersof the transferring company the received sharesin the receiving company are, for tax purposes,regarded as the sales value for the shares.However, the merger is normally tax exempt forthe transferring company and the shareholders ifa number of conditions are fulfilled.

DemergersA demerger (the transaction by which thetransferring company or a part of the transferringcompany’s business is segregated into one ormore new or existing receiving companies) is,for tax purposes, regarded as a sale of assetsfrom or a liquidation of the transferring company.For the shareholders of the transferringcompany the received shares in the receivingcompany are, for tax purposes, regarded as thesales value of for the shares. However, thedemerger can be tax exempt for the transferringcompany and the shareholders if a number ofconditions are fulfilled.

Transfer of assets

Transfers of assets between companies are, fortax purposes, regarded as a sale. However, anintercompany transfer of single assets, acompany’s entire business or a branch thereofcan be tax exempt for the transferring companyif a number of conditions are fulfilled, including:

Both companies must be within the samegroup and the ownership must exceed 90%

The transferring and the receiving companymust continue to stay in the group

The receiving company must take over thefiscal positions for the assets and/or enterprisetransferred



Filing and signing of tax returnsIncome is assessed following thecalendar year, but a non-calendar yearmay be granted if a foreign parentcompany closes its books at a differentdate. Company tax returns must be filedannually, no later than 3 months afterthe end of the calendar year if deliveredon paper, but extended to 5 months ifdelivered electronically. It is possible toapply for an extension of 2 or 4 weeks.A fee of 0.1% of net assets and 0.2% oftaxable income must be paid if delivered0 – 31 days after the deadline. Thesepercentages increase to 0.1% / 1% or0.1% / 2% if delayed more than 1 month/ 2 months.

The taxable income is estimated by thetax authorities if the tax return is notfiled within 3 weeks after the date ofthe tax authorities’ distribution of theprevious years’ tax assessments inSeptember/October. In addition to the28% “ordinary” tax there is also apenalty tax of 30% and an interest of2.4% (both based on the “ordinary” tax)to be paid. All rights of appeal, and thefinal tax loss (if any) for the year, willbe lost.Tax returns for all limited liabilitycompanies and branches/partnershipswith a turnover in excess of NOK5.000.000, must be signed by a publicaccountant.Reporting of salaries and the employers’National Insurance contributions mustfollow the calendar year, and the year-end salary form must be signed by apublic accountant.Payment, collection and interestTax is paid on account in two equalinstalments, February 15 and April 15,on estimated taxable income based onlast year’s actual income. Interest ischarged if less than 100% of the taxassessed in September/October afterthe tax year is not paid as instalments.

The 2009 interest rate is 2.4% onresiduals (paid in two equal amounts onSeptember 15 and November 15),unless the residual is paid within May 31and 1.8% on excess amounts. Specialrules apply for companies that did notpay tax the previous year.

Tax loss carry-forward / backTax losses could be carried forward for10 years and offset against futuretaxable income until end of 2005. Norestrictions apply from January 1, 2006,covering losses from 1996 and lateryears. Carry back of tax losses isavailable for 2 years when a company isliquidated. Tax loss carry-forward isusually forfeited in connection with acapital reconstruction and after a sale ofthe shares, but only if the main purposeof the sales transaction is to avoid taxand there are no commercial purposespresent.

Tax auditsThe local Tax Office may carry out on-site audits of the annual accounts andtax returns. Such audits are not done ona regular basis, but if performed, taxreturns for up to and including theprevious ten years can be investigated.

Items subject to withholding taxRoyalties, interest, management feesand property rentals are not subject towithholding tax, being levied only ondividends, see paragraph 11.

Cross-border migrationMigration to another EEA state willnormally not trigger exit tax. Tax willonly be payable to the extent that anyassets are actually realised within fiveyears of the migration. However,immaterial assets and various currentassets including inventories, are notcovered by the exit rule and are taxed inthe year of migration. If the destination



is a low-tax jurisdiction within theEuropean Economic Area, the presenceand substance test (having a realphysical presence, carrying out genuineeconomic activities and have theeffective management determined bythe place of the day to day businessdecision making abroad) would need tobe satisfied. If not exit tax would still bedue.

Taxation of branches and jointventuresBranches of foreign companies aretaxed on Norwegian income using thesame principles as for a limited liabilitycompany. Interest paid on “loans” tothe “head office” is not tax deductible.Net income from joint ventures isapportioned proportionally among theparticipants.Taxation of partnershipsNet income and net worth is assessedfor the partnership as such and thenapportioned proportionally among allactive and passive participants.Taxable income is based on net incomein the financial statements. However, forcertain items there are specific tax rulesthat take precedence over theaccounting rules, see above for themost important differences.All decisions affecting taxable incomeand net worth are taken by thepartnership and such decisions arebinding for the participants. Tax lossesfrom partnership activities may benetted against the participants’ othertaxable income.Net taxable income after deduction ofsalary to partners charged for workdone for the partnership is taxed in theyear after the fiscal year proportionallyamong all participants at a tax rate of28%. Social security of 11 % (in 2012and 2011), a progressive surtax of 9 % /12 % (see paragraph 9) and 28 % state

and local income tax, are paid on thesalary charged for work done for thepartnership. Personal participants, butnot companies, are in addition in theyear of payment, taxed with 28 % onaccumulated profit actually paid/transferred to the participants. Onlypayments after deduction of the 28% taxpaid on net taxable income and afterdeduction of the average interest rateafter tax of 3 month government billsmultiplied by the participants cost of theshare in the partnership, are subject tothis additional tax.The highest marginal tax rate of 48.16% is identical to the combined tax rateof profit tax of companies (28%) and taxof 20.16 (28% of 0.72) on shareholdersdividends.Taxation of sole practitioners (self-employed)A sole practitioner is taxed as anindividual, see paragraph 9 below.However, detailed regulations forcalculation of the taxable income are inexistence.A net taxable income is calculatedbased on net income in the statutoryaccounts but adjusted for items withspecific tax rules, see above. This netincome is taxed in the year after thefiscal year at a tax rate of 28%. Inaddition social security of 11 % (in 2012and 2011) and a progressive surtax (of9 % / 12 %, see paragraph 9), are paidon a calculated “personal income”.The personal income is calculated asfollows:Net taxable income (before deduction of taxlosses carry forward)+ Actual capital costs and losses (except losses

on trade receivables, fixed assets and interest)- actual capital income from shares, banks,bonds and receivables (exclusive tradereceivables)

- gains on realisation of shares, banks, bondsand receivables

- standard deduction (see below)- negative personal income from previous years



The standard deduction is calculated as follows:Fixed assets + inventories + trade receivables +acquired goodwill and deferred research anddevelopment costs; lessassets used for social activities - liabilities tofinance institutions - trade payables andprepayments from customers= basis of the standard deductionThis basis multiplied by the average interest ratebefore tax of 3 month government bills gives thestandard deduction

Non-taxable companies andorganisationsCompanies and organisations can,upon a successful application to thelocal tax authorities, be granted taxexemption. A non-business objectivemust be adhered to and should beincluded in the Articles of associationand the main objective of thecompany’s activities cannot be

obtaining profits to enable dividends.Dividends and group contributionscannot be made to the shareholders/owners and the net remaining assetsfrom liquidation cannot be distributedto the shareholders/ owners.

7. Taxation of shippingactivitiesIntroductionEffective from January 1, 2007, a newtax regime was introduced replacingthe previous tax deferral systemintroduced in 1996. The new regime issimilar to the tonnage tax regimes inother European countries, with a taxexemption on a permanent basis forincome from shipping and relatedactivities (see below). Income may bedistributed from the shipping company,and the companies may leave the newregime without taxation, see however“Exit rules” below. The companiesmust pay a moderate tonnage tax eachyear (see below).

Overview of the tax systemNorwegian public (ASA) and private(AS) limited liability companies maychoose to be taxed according to the

shipping taxation rules. The companyor the underlying AS/ASA must own oroperate operative vessels. Thecompany’s share must be at least 3%.Income from bareboat charter, pool-operations or a supply/anchor handlingvessel for use in the oil industry and aseismic vessel can also qualify.

The company and any underlyingcompanies cannot hold other assetsthan ships, except for listed shares,financial assets and equipment neededfor and used in shipping operations.An EU/EAA flag is not required for theoperative vessel. Companies within thetax regime must keep their share ofEU/EAA-registered tonnage on thesame level or on an increased levelcompared to July 1, 2005, if this shareis less than 60% of total net tonnage.However, this is not required if the totalshare of Norwegian EU/EAA-registeredtonnage within the tax regime as atDecember 31 the preceding year is at



the same level or increased comparedto the same share the year before. Theshare on national level increased from73.9% to 74.3% from January 1 toDecember 12, 2009; resulting in noflag requirement on company level forthe income year 2010. Companiesmust leave the regime effective fromJanuary 1, 2009 if their 2009 EU/EAA-registered tonnage share is lower than60% and lower than the share at July1, 2005. Companies have 2 months,from September 29, 2009, to fulfil therequirement.Income from shipping-related activitiesconnected to qualified vessels will betax exempt under the new regime.Examples of connected businessesare: shipping management and administration in

connection with the company’s own or hiredships, ships in group companies or shipswithin a pool cooperation loading and unloading of goods temporary storage of goods in connection

with further maritime transportation maritime transport of goods and persons the letting out of containers for the purpose

of goods on board loading and unloading of passengers operation of ticket offices and passenger

terminals sale of goods for consumption on board and

letting out of premises on board door-to-door transportation

Financial income, such as interestincome, capital gains on disposal ofnon-shipping shares and foreignexchange profits, will be taxed at 28%(after a pro-rata deduction of interest).Gains on sale of fixed assets (includingships) and shares in partnerships andN-CFC’s are taxable if the assets arerealised within 3 years after entry intothe new regime. The same apply if thecompany exits the regime within 3years after entry. There will also be anadditional tax if the equity exceeds70% of gross assets, the tax is theexcess amount multiplied by a rate of

3.0% (2010 rate, adjusted yearly).

Companies within the new regimehave an opportunity to give andreceive group contributions to/fromcompanies outside the regime.However, such group contributions willnot have any tax effects. Loans from acompany within the tax system to aNorwegian taxpayer (person orcompany) are not allowed, but only ifthe company has deferred tax liabilitiesfrom the “old” tax regime.

The Government will in later yearsconsider a new requirement implyingthat strategic and commercialmanagement must be located inNorway.

Entry rulesNew entry rules will apply tocompanies entering the new regime asof 2009. The shipping companies’deferred taxes will be settled uponentry into the new regime. Thisinvolves a taxation of the differencebetween market values and tax valuesof the assets. Potential capital gains onother assets than financial assets andlong term debt will be taxed on a 20 %annual basis through the profit andloss accounts. A shipping companybuying a share in a partnership or aCFC-company after October 5, 2007will be taxed based on a positivedifference between the tax value andthe market value of the share. Thisalso applies to transfers of ships into acompany within the new regime. If theentry generates a tax loss, this tax losswill disappear as a consequence of theexemption regime. Furthermore, theopportunity to set off tax loss carriedforward from 2006 and earlier againstcalculated income is removed on entryinto the new regime.

The assets of companies which wereoutside the new tonnage tax regime



and entered the tax regime in 2007 or2008 were valuated based on bookvalues. These companies were subjectto tax on possible capital gains,calculated in accordance with theabovementioned principles for the nextthree years after entry if they sell ships,shares in partnerships or a CFC-company or they leave the regime.

Exit rulesNew tax values on operational assetsand shares in partnerships or CFC-companies will be assessed to theirmarket value on exit from the newtonnage tax regime as of 2008. This isto prevent gains/loss occurred withinthe tonnage tax period from beingincluded at a later tax assessment. Toprevent adaptation, withdrawn shippingcompanies are denied receiving groupcontributions with tax effect in the exityear and the following two years.

Tonnage taxCompanies within the tax system mustpay a yearly tonnage tax calculated onthe total net tonnage using thefollowing rates per day per 1.000 nettons (for 2010 and 2011): 0 – 1.000 net tons: NOK 0 1.000 – 10.000 net tons: NOK 18 10.000 – 25.000 net tons: NOK 12 above 25.000 net tons: NOK 6

The tonnage tax may be reduced up to25% for ships satisfying definedenvironmental requirements.

Taxation of seamen

See the section “Calculation of nettaxable income” in paragraph 9 below.

Tax treatiesNorway has signed treaties limited toshipping activities only, with Argentina,China, Greece, Hong Kong, Lebanon,New Zealand, the Soviet Union (1974),South Africa, South Korea andYugoslavia (1966).

8. Social security



Employers’ contributionEmployers’ contribution to the NationalInsurance Scheme (arbeidsgiveravgift)vary from 0% – 14.1% of total grosswages according to what region thecompany is located. The lowest ratesare in the northern regions, Nord-Tromsand Finnmark.

Defined industries, including productionof electricity, oil and steel andtelecommunication services, must usethe 14.1% rate regardless of region iftotal gross wages exceed NOK 530 000(in 2012 and 2011).

Charitable and non-profit institutionsand organisations do not pay socialsecurity for total gross salaries belowNOK 450.000 (maximum of NOK45.000 for each tax payer).

Employees’ contributionEmployees’ contribution is 7.8% (3%health insurance and 4,8% pensioncontribution) of gross personal income(excluding capital income) above NOK39.600 (2012 and 2011), but 11% (in2012 and 2011) for income from apersonal enterprise and 4,7% (2011:4,7%), health insurance part only, forpensioners (older than 68).The social security is reported and paidevery 2 months, 15 days after the end ofthe two-month period. January andFebruary is thus reported and paid onMarch 15.

International social securityagreementsNorway has entered into separateagreements with Australia, Canada,Chile, Croatia, Switzerland, Turkey andthe USA. It should be noted that theagreement with USA and Canadacovers only the pension contribution of4.8%, see above. These agreementsregulate which nation’s insurancescheme shall be applicable. Personsfrom EU/EEA countries are covered bythe Council Regulation (EEC) 1408/71.Membership of the Norwegian NationalInsurance Scheme is compulsoryunless otherwise agreed in the aboveinsurance scheme agreements. Themain principle in the agreements is thatthe employee is covered by the socialsecurity system of the country wherethe work is performed. However,employees working both in Norwayand another country are covered bythe security system of the country ofresidence. The employee mustdocument being a member of thesocial security system of the othercountry by providing the form E 101 toavoid Norwegian social security. TheNorwegian employer must in such acase take the appropriate action toobtain relevant information about andpay all applicable employers’ and/oremployees’ social securitycontributions, according to the othercountry’s social security system.

9. Personal taxation Tax rates



Norway has a personal taxation systemwith variable tax rates charged onworld-wide property/financial andpersonal income and capital gains lessdeductible expenses:State and local income tax

28% of net taxable income (inclusive ofdividends and gains from realization ofshares (amounts exceeding the cost ofthe shares multiplied by the averageinterest rate after tax of 3 monthgovernment bills), other capital incomeand all gains from property, capital,work or enterprise, less losses fromrealization of shares and lessdeductions, see below).Surtax (“top” tax)2012: 9% of gross personal income(gross wages and pensions but usuallynot capital income, see below) betweenNOK 490,000 and NOK 796,400 and12% of gross personal income inexcess of NOK 796,400. (2011: 9% ofgross personal income (gross wagesand pensions but not capital income)between NOK 471,200 and NOK765,800 and 12% of gross personalincome in excess of NOK 765,800.)State wealth tax2012: 0.4% of net taxable worth, afterdeductible liabilities, above NOK750,000 in class 1 and NOK 1,5400,000in class 2. (2011: 0.4% of net taxableworth, after deductible liabilities, aboveNOK 700,000 in class 1 and NOK1,400,000 in class 2.)Municipal wealth tax2012: 0.7% of net taxable worth, afterdeductible liabilities, above NOK750,000 in class 1 and NOK 1,500,000in class 2. (2011: 0.7% of net taxable

worth, after deductible liabilities, aboveNOK 700,000 in class 1 and NOK1,400,000 in class 2).Shares in listed companies are valuedat 100% of the quoted value of theshares at year end. Shares in non-listedcompanies are normally valued at 100%of the company’s net taxable value atthe beginning of the tax year.Social security

7.8% of gross personal income aboveNOK 39,600 (but usually not capitalincome, see below), but 11% if theincome is derived from a personalenterprise / from self-employment,except in fishing and 4,7% (2011:4,7%), health insurance part only, forpensioners (older than 68).There are separate tax rates in thenorthern regions, Nord-Troms andFinnmark (2012: 7% top tax betweenNOK 490,000 and NOK 796,400 and24.5% state and local income tax (2011:7% top tax between NOK 471,200 andNOK 765,800 and 24.5% state and localincome tax). There is also an extradeduction of NOK 15,000 in class 1 andNOK 30,000 in class 2 for a person taxresident in these regions (in 2012 and2011).

Tax classes

Class 1: A single person or a marriedperson assessed separately.Class 2: Married couples assessedtogether or one-parent families.Income from investment in property andother capital items is only subject to 28% income tax, unless the taxableactivities are of profit generating natureand exceed certain limits (consideringfactors like size, number of investments,number of hours used and/or whetherthe investments are of short or longterm nature). If the limits are exceeded,this income will also be subject to surtax



and social security. Renting out lessthan 500 m2 of business property andless than 5 apartments is usuallyconsidered to be within acceptablelimits.Calculation of net taxable incomeMost fringe benefits, including freecompany telephone and cars and lowinterest loans, are taxable. However,remuneration below fixed rates inconnection with commuting, travel anduse of a private car is not taxable. Alltaxpayers are entitled to a personaldeduction (2012: NOK 45.350 in class 1and NOK 90.700 in class 2 and 2011:NOK 43.600 in class 1 and NOK 87.200in class 2). In addition a minimumdeduction of 38% is allowed on taxableincome (in 2011: 36%). The maximumdeduction is NOK 78.150 in 2012 andNOK 75.150 in 2011, with a lowerthreshold of NOK 4.000.The following items are normally taxdeductible if documented (use the link to“Private tax return – guidelines to items”in Appendix A for a complete list ofdeductible items): interest payments (unlimited

deduction for interest paid on debts) premium for own pension insurance

(maximum NOK 15.000 in 2012 and2011) premium for contracted illness/injury

insurance trade union membership fees (max

NOK 3.750 in 2012 and NOK 3.660in 2011) child care/kindergarten (max NOK

25.000 for the first child and NOK15.000 for each additional child (in2010 and 2011)) illness expenses (unlimited above

NOK 9.180 (in 2012 and 2011)) gifts to voluntary organisations (max

NOK 12.000 (in 2012 and 2011))

There is no special tax regime forexpatriates in Norway. However, astandard deduction of 10% of grosssalary is allowed for foreigners residingtemporarily in Norway on the first twotax returns. The deduction has an upperlimit of NOK 40.000 and replaces theitems listed above.Seamen are (in 2010 and 2011) entitledto an extra seamen deduction of 30% ofnet income (maximum NOK 80.000)when working more than 130 days peryear on Norwegian vessels. Seamenemployed on NOR-registeredpassenger ships in internationaloperations or on ships in petroleumoperations, are subject to the net wagearrangement, i.e. exemption fromincome tax and social security and thecompany is exempted from socialsecurity (if the seamen are taxable toNorway for the income earned on theship, are tax resident in Norway or anEU/EEA country and qualify for aseamen deduction). Only minimumsecurity crew according to the ship’salarm instructions are covered.

Tax paymentEmployees pay tax in advance,deducted by the employer from eachsalary payment, with a final settlementafter having received the result of theassessment for the previous year fromthe tax authorities in June orSeptember/ October.The employee taxes deducted arebased on tax deduction cards issued bythe tax authorities after registering andobtaining an organisation number fromCCRLE (see paragraph 3).Registration is done automatically inthe Aa-register if information ofemployees in Norway is given toCCRLE.The CCRLE-registration is done byfilling in part 1 of the combined



registration form (Samordnetregistermelding).Taxes are reported and paid every 2months, 15 days after the end of thetwo-month period. January andFebruary is thus reported and paid onMarch 15. Taxes deducted must bedeposited on a restricted bank accountin the period from salary payment topayment to the tax authorities.

Filing of tax returnsPersonal tax returns must be filed nolater than 4 months after the end of thecalendar year. A draft return with pre-completed information is sent from thetax authorities to all personal tax payersabout one month before the filing date.All drafts must be checked and ifnecessary corrected and any missingitems/information must be added.Sole practitioners and participants inpartnerships (selvstendig nærings-drivende) must file the tax return no laterthan 3 months after the end of thecalendar year if delivered on paper, butextended to 5 months if deliveredelectronically.

Tax residency and immigration/emigrationImmigrationIndividuals moving to Norway andstaying in the country for more than 183days in a twelve month period areconsidered to be domiciled in Norwayand are subject to income tax for theirworld-wide income independent of thesource country. The same apply to anindividual residing in Norway for morethan 270 days in a 36 month period.EmigrationIndividuals are not taxable to Norwaywhen leaving the country on apermanent basis. To be consideredemigrated the individual involved has tosubstantiate that he/she is (1)

permanently domiciled abroad, (2) thathe/she has not stayed in Norway formore than 61 days in the tax year and(3) that he/she or the spouse and/orchildren does not have a houseavailable where they can stay whenvisiting Norway. If the individual haslived in Norway for less than 10 yearsbefore leaving Norway, he/she will beconsidered emigrated in the year whenall three requirements are met. If theindividual has lived in Norway for morethan 10 years before leaving Norway,he/she will not be considered emigratedbefore the end of the third tax year afterthe year leaving Norway.Unrealized gains on shares above NOK500 000 at the time of emigration, aretaxable at 28 % to Norway, but not untilthe time of realization, unless the sharesare owned for more than 5 years afterthe time of emigration. A guarantee forfuture possible taxes is required for allcountries outside the EU/EEA-area andfor Cyprus, Hungary, Malta, Slovakia,Slovenia, Spain and the UnitedKingdom within the EU/EEA-area.When tax treaties exist, such treatiesmay often result in other solutions. Thecountry where the person is domiciled(usually the country where thepermanent home is located, but if thereis a permanent home available in bothcountries, the deciding factor will be inwhich country the personal andeconomic relations are closer/the centreof vital interests) is usually given theright of taxation of all income if theperson is taxable to Norway accordingto Norwegian internal tax rules andtaxable to another country according tothe tax treaty.Usually only income and assets that areclosely linked to Norway, includingdividends from Norwegian companies,wages earned in Norway, income frombusiness activities in Norway andincome from real property in Norway,



are taxable to Norway according to thetax treaty. A Norwegian tax returnincluding all/world-wide income must besubmitted.

Non-residentsNon-residents are taxed on income,dividends and capital gains derivingfrom sources in Norway. Thewithholding tax on dividends (seewithholding tax rates in Appendix D) forpersonal taxpayers that are tax residentin the EU/EEA-area is, if an alternativecalculation is lower than the “ordinary”withholding tax, reduced to the result of

using a 25% withholding tax ratemultiplied by net dividends received (netdividends is defined as dividends after adeduction of 1.3 % (2009-rate) of thecost price of the shares).

Special rules exist for taxation ofseamen tax resident abroad (seeabove), for non-residents workingoffshore, for subcontracted (leased)labour and for employees working inNorway for foreign companies without apermanent establishment (the 183/270days rule, see above) and for hiring outof people from abroad (taxable toNorway from day 1).Effective from tax year 2010 there willbe a 15% withholding tax on pensionspaid from Norway, unless otherwiseagreed in the relevant tax treaty.

10. Value added tax (VAT)Overview of the systemNorway applies a system based on thesame principles as the EuropeanUnion’s Sixth VAT Directive, but asNorway is not a member the VAT Act



does not constitute an implementationof the directive. VAT is imposed on theturnover value of imports and deliveriesof goods and rendering of services. VATis calculated at all stages of the supplychain and on the import of goods andservices from abroad. The VAT due ateach stage amounts to the differencebetween the output tax on sales and thedeductible input tax on purchases. Thefinal consumer, who is not registered forVAT, absorbs VAT as part of thepurchase price.Registration proceduresCompanies and other enterprises andpersons delivering taxable goods orrendering services (including foreignbusinesses, see below) must register forVAT purposes by sending part 2 of thecombined registration form “Samordnetregistermelding” to The CentralCoordinating Register for Legal Entities(Enhetsregisteret - CCRLE), if andwhen they have an annual taxableturnover of more than NOK 50.000(NOK 140.000 for charitable and non-profit institutions and organisations).Special rules exist for pre-registrationand retrospective (for a maximum ofthree years) VAT-returns.

Taxable transactions, exemptionsand zero-rated transactionsAll deliveries of goods and rendering ofservices including imports of goods (seebelow for import of services), aretaxable transactions unless specificallyexempted from VAT (without credit forinput VAT).The most important exemptions are thesupply and letting of real property andrights to real property, financial services,health services, social services,educational services, services that forma natural part of health, social oreducational services, the hiring out ofhealth, social and teaching personnel,

cultural services, sport activities, travelagencies and guide services) and publicauthorities. Output tax is also calculatedwhen a taxable person/companytransfers goods or services from theordinary business for personal use or forpurposes outside the scope of the VATAct.Many transactions are, however, zero-rated (exemptions with credit for inputVAT), including exports, offshorepetroleum activities, deliveries to foreignships and ships in foreign service,deliveries to aircraft on internationalflights, transport services directly to orfrom abroad, the procurement ofpassenger transport abroad or directlyto or from abroad, transfer of a businessto a new owner, newspapers, booksand periodicals, used vehicles that hasbeen previously registered in Norway,sales of certain ships, aircraft andplatforms, building and repair of ships,aircraft and platforms and hiring out ofcertain ships, aircraft and platforms.

The basis of the output tax includes allcosts for the fulfilment of the agreement,including costs for packaging, dispatchand insurance, customs duty and otherduties pursuant to legislation,connection charges, fees, commissionsand service charges.



VAT ratesStandard VAT-rate is 25%, for domesticsales calculated on the sales price andfor imports calculated on the customsvalue.

The VAT-rate on the supply of foodstuffis 15% (14% in 2011). Foodstuff is anyitem of food or drink intended for humanconsumption. Medicines, water fromwater utilities, tobacco products andalcoholic drinks are not included. Ifdeliveries of foodstuff are part ofrendering services connected with theserving of such foodstuff, VAT iscalculated at 25%.The VAT-rate is 8% on the supply ofpassenger transport services and onhotel accommodation and relatedservices. The same rate applies totransport services regarding the ferryingof vehicles as part of the domestic roadnetwork, and to the television license.In the case of deliveries of raw fish to, orvia, a fishmongers’ co-operativeestablished pursuant to the Raw FishAct, the VAT-rate is 11.11%.Deductions and refundsRegistered companies are entitled todeduction for input VAT. In addition, theright to deductions applies to registeredpersons and companies deliveringgoods or rendering services that fallwithin the scope of the VAT Act, but arezero-rated, such as exports.Under certain circumstances, visitorsfrom abroad (tourists) may recoverNorwegian VAT paid on purchasesmade in Norway.

Import of services – the reversecharge systemVAT must be paid on the purchase ofservices from abroad. Liability for VATexists if the Norwegian purchaser is ataxable company or a public institution

and the service would be liable to VAT ifrendered in Norway. Private consumerpurchases are not included, apart fromelectronic communications servicesrendered from abroad, see below. VATliability applies only to those servicesthat are capable of delivery from aremote location, i.e. where the provisionof the service, by its nature, is difficult toassociate with a particular physicallocation. Examples are all services thatcan be supplied digitally, consultancyservices, advertising services, hiring outof people (see definition of hiring out in”Residence, territoriality andpermanent establishment” underparagraph 6), legal services andvarious kinds of information services.The recipient in Norway (the taxablecompany or the public institution) mustcalculate and pay VAT on all servicesthat can be supplied from a remotelocation (reverse charge or self-assessment).For services that cannot be providedfrom a remote location, for examplework on real property or goods, thehiring out of goods, transport services,hairdressing and services connectedwith the serving of foodstuff, the foreignbusiness must register for VAT. If theforeign business is neither establishednor resident in Norway, the companymust register through a representative,see below.Filing of VAT-returns and paymentsRegistered companies must file reportson output and input VAT for two-monthperiods. Shorter periods are granted ifthe input tax regularly exceeds theoutput tax by 25 % or more. Payment ofthe net VAT-balance must be madewithin 40 days after the end of the VAT-period. Taxable companies with ataxable turnover of less than NOK 1million per year may apply to submitonly one VAT return annually.



Foreign businesses and VATForeign businesses engaged inactivities which are liable for VATregistration must calculate and pay VATaccording to the same rules asNorwegian businesses. Foreignsuppliers of electronic communicationsservices must calculate and payNorwegian VAT when such services aresupplied to private individuals and otherpersons that are not engaged inbusiness or public institutions, and whoare resident in Norway. In these casesVAT must be calculated and collectedby the foreign supplier through arepresentative who must have hisresidence or his place of establishedbusiness in Norway, see below.

Foreign businesses delivering goodsand rendering services in Norway, mustregister when deliveries of goods and/orrendering of services exceed NOK50.000 during a 12 month period. Awritten note of the business activitymust be sent to The CentralCoordinating Register for Legal Entities(Enhetsregisteret - CCRLE) or to theCounty Tax Office where the foreigner(or his representative) has his place ofbusiness/ residence. The written noteshall be given by filling in the combinedregistration form "Samordnetregistermelding" Part 1 and 2. If thebusiness is already registered inCCRLE and has given all the necessary

information to this register, only part 2 ofthe registration form shall be filled in.A foreign non-established business withVAT taxable deliveries in Norway, mustregister for VAT through arepresentative. The representative musthave his place of business or residencein Norway. Both the foreign businessand the representative must sign theregistration form. The foreign businessmust keep a complete account for itstaxable activity in Norway (all purchasesand deliveries).The invoices for the foreign business’deliveries in Norway must be sentthrough the Norwegian representative,who shall include his own name andaddress, the foreign business’registration number (organizationnumber) followed by the letters MVAand the VAT (output VAT) on theinvoice. The invoices shall be issued inat least 3 copies, and at least one mustbe kept by the representative. Both theforeign business and the Norwegianrepresentative are responsible for thecalculation and payment of the VAT.A foreign business established orresident in Norway must carry out itsbookkeeping according to theNorwegian Bookkeeping Act, seeparagraph 4 above. Foreign businessesthat are registered in the VAT registermust calculate and pay VAT (outputVAT) on their deliveries of goods and

rendering of services in Norway. Aforeign business is entitled to deductVAT paid on goods and services whichare to be used in his Norwegianbusiness (input VAT). The right todeduction also includes VAT collectedby the Customs authorities at the importof goods and VAT paid on the purchaseof services from abroad. VAT-registeredcompanies must submit returns on abimonthly basis to the County TaxOffice. Taxable companies with ataxable turnover less than NOK 1 million

per year may apply to submit only oneVAT return annually.

Foreign businesses that have not beenregistered or have not been engaged inan activity which is subject toregistration in Norway, may onapplication using a standard form (RF-1032) apply for refund of VAT paid ongoods or services purchased within orgoods imported into Norway. Theconditions for refunds of VAT are that:



the purchases are for use in thetaxable activity the foreign business is not liable to

register for VAT in Norway the value added tax relates to the

applicant’s business activities carriedout abroad the business would have been liable

to registration in accordance with theNorwegian VAT Act if it had beencarried out in Norway the VAT would in that case have been

deductible.

VAT on goods/services acquired orimported and sold in Norway is notrefunded. This also applies to VAT ongoods imported for delivery topurchasers in Norway. Refunds do notapply to purchases of items like worksof art or antiques, or to expenses

related to catering at restaurants,entertainment or personal vehiclesincluding rental cars.

Applications must be sent to Skatt Øst,Postboks 1073 – Valaskjold, 1705Sarpsborg, NORWAY, no later thanJune 30 of the year after the calendaryear to which the application relates andrefunds must amount to at least NOK2.000. If the application relates to awhole calendar year or the rest of acalendar year, amounts exceeding NOK200 can be refunded. An applicationmust cover at least three months and atmost one calendar year. The period canbe less than three months if it is the restof a calendar year.

11. Tax treaties



Tax treaties between Norway and othercountries are entered into for theavoidance of double taxation, theon delivery conditions, pricing anddiscounts must not be made by theemployee in Norway.

The main principle in the Norwegian taxtreaties has been the principle ofapportionment, i.e. that income/assetstaxed in another country shall beexempt from taxation in Norway. In taxtreaties of recent years the creditmethod is used, resulting in Norwegiantaxation being reduced for tax paidabroad.

Withholding tax is levied only ondividends outside the tax exemptionmodel, see “Dividends and gains andlosses on realization of shares” in Article6. Excessive royalty and interestpayments may, however, be reclassifiedas dividends. The withholding tax rate is25% for all countries without a taxtreaty.

See Appendix D for an overview of alltax treaties in effect and applicablewithholding tax rates on dividends fromNorway. Norway has also signedtreaties limited to shipping activitiesonly, with Argentina, China, Greece,Hong Kong, Lebanon, New Zealand, theSoviet Union (1974), South Africa,South Korea and Yugoslavia (1966).Treaties limited to air transport aresigned with Argentina, Czech Republic,Greece, Hong Kong, Iran, Kuwait,Lebanon, Saudi Arabia, the SovietUnion (1974), South Africa, SouthKorea, Ukraine, Uruguay, Uzbekistanand Yugoslavia (1966) and a treatylimited to land transport is signed withthe Soviet Union (1974).The treaties generally follow the ModelConventions’ article 5 in the definition ofa permanent establishment. Apermanent establishment in most

treaties means a fixed place of businessthrough which the business of anenterprise is wholly or partly carried on,and includes especially a place ofmanagement, a branch, an office, afactory, a workshop, and a mine, an oilor gas well, a quarry or any other placeof extraction of natural resources.It should be noted that the Norwegiantax authorities understanding of an“office” is that there is no requirementthat the office premises/ facilities mustbe owned or rented by the company. Anoffice rented by the employee or theemployees’ private home can qualify asan office. If all activities are performedduring travels to customers, and notfrom a "permanent" office or from theemployees’ private home, there is nopermanent establishment.

In order not to qualify for a permanentestablishment there is also an additionalrequirement. The employee mustperform only marketing and informationactivities of preparatory character andhe/she cannot have authority tonegotiate, enter into or approve salesorders/contracts or otherwise performactivities that results in legal obligationsfor the company. All proceedings andsigning of sales orders/contracts musttake place between the Norwegiancustomer and the foreign company andpreparations of tenders and decisionson delivery conditions, pricing, discountsetc must not be made by the employeein Norway.



12. Miscellaneous taxes

Taxation of foreign artistsForeign artists and athletes (henceforthnamed artists) who participate in eventsor perform as artists in Norway aretaxable at a tax rate of 15% pursuant tothe Foreign Artists Taxation Act.However, if the artist’s stay in Norwayexceeds 183 days in the course of any12 month period or exceeds 270 days inany 36 month period, the artist willbecome tax liable to Norway pursuant tothe standard Norwegian tax legislation.The event or performance must bereported on a special form to CentralOffice - Foreign Tax Affairs (COFTA) nolater than three weeks before thescheduled date. The person orcompany engaging the artist, or theorganizer of the event, is responsible forsubmitting the report.All economic compensation earned inconnection with activities as an artist istaxable in Norway. This also applies tobenefits in kind. Any payments coveringexpenses must be included in the taxbasis, apart from payments coveringdocumented travel expenses, boardingand lodging expenses and agent’scommission in connection with theevent in Norway. If the artist pays for thetravel, boarding and lodging expenses,the tax basis is reduced by the total sumof documented expenses. No otherexpenses are deductible. If an artistcannot prove the expenses for boardingor travel with his/hers own means oftransport for himself and his co-workers,but is likely to have incurred theseexpenses, the artist is entitled to

deductions according to standard ratesadjusted yearly.

Inheritance/gift taxThe tax is payable on all inheritancefrom a person who, while alive, wasdomiciled in Norway, or was aNorwegian citizen. The same apply togifts above 0.5 G (1 G = NOK 79.216as at May 1, 2011) each year topersons entitled to inherit. For 2010and 2011 0% is to be paid oninheritance to parents and children upto NOK 470.000, 6% between NOK470.000 and NOK 800,000 and 10%above. For inheritance to otherpersons the 2012 and 2011 -percentages are 0%, 8% and 15% withthe same limits in NOK as forparents/children.

Real estate (property) tax andregistration fee/stamp dutiesFees/duties are payable by thepurchaser, unless otherwise agreedwith the seller, at the time when thetransfer of ownership of real estate isregistered with the Real EstateRegistrar. The rate is 2.5% of thepurchase price.

Other/special taxes/dutiesSpecial duties are imposed on certaintypes of goods, including sale of cars,gasoline, alcoholic beverages, tobaccoand chocolate. Rates are fixed by theParliament on an annual basis and theduties are included in the sales price.



13. Other issues

Employment of foreigners and workpermitsThe Norwegian immigration regulationsrequire work permits for all non-EU/EEA citizens. Citizens of EU/EEAcountries do not require work permits,but they must be registered with thelocal police and tax authorities in theirdesignated place of residence inNorway before commencingemployment in the country.

Reporting of business activities inNorway and contracts/employees

The Central Office – Foreign TaxAffairs (COFTA) must be informedabout all contracts and subcontractsawarded to an enterprise or a personresident abroad, provided that thecontract is performed on a site forbuilding and assembly work in Norway,or on a site that is under the client’scontrol in Norway, or on the NorwegianContinental Shelf. The obligation toreport applies to Norwegian andforeign businesses and the publicsector. Information is not required inthe case of contracts worth less thanNOK 10,000.

The client (awarding the contract) mustsubmit information about both thecontractor and any employees used tocarry out the assignment. Thecontractor is also obliged to submitinformation about employees used tocarry out the assignment.

Information about the contractor mustbe submitted as soon as possible afterthe contract has been entered into andno later than 14 days after the workhas commenced. A copy of thecontract can be enclosed. It is enoughto enclose the contract’s description of

the assignment, guarantee/liabilityconditions and terms of payment. It isnot necessary to submit the technicalrequirement specifications.

Information about employees must besubmitted within 14 days of theemployee’s first working day on theassignment. Information about the lastworking day must be submitted no laterthan 14 days after the last working day.

If changes occur after the informationhas been submitted, correctedinformation must be submitted no laterthan 14 days after the changeoccurred.

Agreements can be entered intobetween clients at one or more levelsin the contractual chain and betweenclients and contractors that one ofthem will submit the information toCOFTA . Such an agreement does notrelease the parties from liability orexempt them from enforcement finesor penalty charges.

The information must be submitted toCOFTA in Norwegian or English onlinevia altinn.no or by filling in the formRF-1199 on paper.

Failure to comply with the obligation tosubmit information may result inenforcement fines, liability for taxesand employer’s national insurancecontributions and penalty charges.



Taxation of N-CFC’s (NorwegianControlled Foreign Companies)Norwegian owners with direct orindirect control over companies in lowtax countries, are taxed in Norway fortheir proportional share of the net profitof the company in the low tax country.Companies in low tax countries includefoundations, trusts and other corporateforms.

Norwegian control requires at least50% direct or indirect control orownership by Norwegian domiciled taxpayers (persons and companies) at thebeginning and the end of the fiscalyear. There is also an N-CFC (NOrskKontrollert Utenlandsk Selskap(NOKUS)), if Norwegian residenttaxpayers owns or controls more than60% of such foreign entity at the year-end.

There is no N-CFC if the company isestablished in and carries out factuallong term commercial activities in anEU/EEA-country.

The net profit is calculated bytranslating the foreign financialstatements figures into NOK, using theyear end currency rate, and preparinga set of tax accounts based onNorwegian taxation rules, seeparagraph 6 above. Fixed assets aredepreciated using the declining balancemethod. Dividends from suchcompanies are not taxed in Norway ifthe dividends are within the year’s net

profit. Losses may be netted againstother taxable income, except forcompanies within the shipping taxsystem, see paragraph 7 above.Losses in shipping, however, can beoffset against future shipping profits.

A country is defined as a low taxcountry if the average total tax,calculated over a representative periodof more than one year, of such foreignentity is less than 2/3 of what theNorwegian tax (based on a tax rate of28%) would have been, had the foreignentity been taxed in Norway. Somecountries are, however, always definedas low tax countries by the taxauthorities and some are neverconsidered as low tax countries(independent of the above mainprinciple), see Appendix C.

If the effective management,determined by the place of the day today business decision making, of suchforeign entity moves to Norway, thenthe foreign entity will also beconsidered to be a Norwegian taxresident company, from the date theeffective management is moved,although it was foreign registered.

The above regulations do not usuallyapply if a tax treaty is in existence.However, N-CFC rules will normally beused if the income in the low taxcountry is from financial sources.



Appendix A – Useful web-links (see http://www.moorestephens.no/eMSlinker.htm)

Background information aboutNorway (I) http://odin.dep.no/odin/english/norway/norway/bn.htmlBackground information aboutNorway (II) http://www.norway.no/Default.asp?

Minifacts about Norway http://www.ssb.no/english/subjects/00/minifakta_en/en/

Bedin – company information http://www.bedin.no/php/startside_eng/cf/hDKey_2

Central Office – Foreign Tax Affairs http://www.skatteetaten.no/Templates/GenereltInnhold.aspx?id=9125

Tax treaties - overview http://www.regjeringen.no/en/dep/fin/Selected-topics/taxes-and-duties/tax-treaties-between-norway-and-other-st.html?id=417330

- withholding tax rates http://www.odin.dep.no/fin/english/topics/p4500279/p4500284/006031-990247/dok-bn.html

- limited treaties http://www.regjeringen.no/en/dep/fin/Selected-topics/taxes-and-duties/tax-treaties-between-norway-and-other-st.html?id=417330

Transfer price documentation http://www.skatteetaten.no/en/Alt-om/Transfer-Pricing-in-Norway/

Private tax return – guidelines to items http://www.skatteetaten.no/en/Bibliotek/Publikasjoner/Rettledninger/Rettledninger-2011/Guidelines-to-the-individual-items-2010/?printmode=true

Other tax information (taxnorway.no) http://www.skatteetaten.no/Templates/International/InternationalDefault.aspx?id=75713&epslanguage=EN

Guide to VAT in Norway http://www.skatteetaten.no/en/Bibliotek/Publikasjoner/Brosjyrer-og-boker/Guide-to-Value-Added-Tax-in-Norway/

Refunds of VAT to foreign businesses http://www.skatteetaten.no/en/Bibliotek/Publikasjoner/Brosjyrer-og-boker/Refunds-of-value-added-tax-to-foreign-businesses/

Norwegian Customs http://www.toll.no/default.aspx?id=3&epslanguage=EN

Guide for foreign employers and http://www.skatteetaten.no/en/International-pages/Employers/foreign/79449/Guide-for-foreign-employers-and-employees/

Ministry of Finance http://www.regjeringen.no/en/ministries/fin.html?id=216

Oslo Stock Exchange http://www.oslobors.no/ob/?languageID=1

Oslo Axess http://www.osloaxess.no/ob/auma_forside?languageID=1

Requirements for listing on theStock Exchange http://www.oslobors.no/ob_eng/Oslo-Boers/Listing

Norwegian Commercial Registry http://www.brreg.no/english/

The Norwegian Institute of Accountants http://www.revisorforeningen.no/a9018654/English

SSB – Statistics Norway http://www.ssb.no/english/

The Financial Supervisory Authority http://www.finanstilsynet.no/en/

Central Bank of Norway http://www.norges-bank.no/default____106.aspx

Legislation translated into English http://www.lovdata.no/info/uenga.html

Nordic eTax http://www.nordisketax.net/default.asp?l=eng

Nordic Social Insurance Portal http://www.nordsoc.org/



Appendix B – Depreciation rates for tax purposes(the maximum rates are reduced proportionally if the company changes its accounting year) Maximum rate 2011Group A Office machinery etc 30%

Group B Acquired goodwill 20%

Group C Trailers, lorries, buses and taxicabs 20%

Group D Cars, tractors, machinery, tools, instruments, fixtures and furniture 20%

Group E Ships, vessels and offshore rigs 14%

Group F Aircrafts and helicopters 12%

Group G Constructions for transfer of electricity 5%

Group H Buildings and constructions and hotels (time of use > 20 years) 4%Buildings and constructions and hotels (time of use < 20 years) 8%

Group I Office buildings 2%

Group J Technical installations in office buildings and other commercial buildings 10%

Appendix C – Low tax countries (as defined by the Norwegian tax authorities)A country is defined as a low tax country if the average total tax, calculated over a representativeperiod of more than one year, of such foreign entity is less than 2/3 of what the Norwegian tax (basedon a tax rate of 28%) would have been, had the foreign entity been taxed in Norway. When tax treatiesexist, such treaties may result in other solutions.

The following countries are always considered as The following countries are never consideredlow tax countries (independent of the above as low tax countries (independent of themain principle): above main principle):

- Andorra - Australia- Bahamas - Belarus- Bahrain, except companies taxable for oil activities - Canada- Bermuda - Chile- Cayman Islands - China- Channel Islands (Jersey, Guernsey, Lihou, Jethou, - Croatia

Herm, Alderney, Great Sark, Little Sark and - IndiaBrecqhou) - Japan

- Hong Kong - New Zealand- Isle of Man - Russia- Liberia - Ukraine- Macao - USA- Marshall Islands (this is not binding, however, for profits from- Moldova realisation of shares in companies in low- Monaco tax countries)- Montenegro- Nauru- Oman- Panama- Paraguay- St. Kitts & Nevis- United Arab Emirates- Vanuatu- Virgin Islands (American and British)



Appendix D – Tax treaties at February 18, 2010

Country

Status

Withholding tax ratesMain

methodOrdinary

ratesParent/

subsidiaryParent/subsidiary raterequirements

Without tax treaty - - 25 25Albania 1 C 15 5 25% capital participationAlgeria 3Andorra 3Anguilla 2Antigua 3Argentina 1 C 15 10 25% capital participationAruba 2Azerbaijan Republic 1 C 15 10 30% capital participation and an

investment of > USD 100 000Australia 1 C 15 5 10% voting power, rate = 0% if

Article 10, § 3 is fulfilledAustria 1 C 15 0 Beneficial owner is a companyBahamas 3Bangladesh 1 C 15 10 10% capital participationBarbados 1 A 15 5 10% capital participationBarbuda 3Belgium 1 A 15 5 25% capital participationBelize 3Benin 1 A 20 20Bosnia Hercegovina 1a) A 15 15Brazil 1 A 25 25British Virgin Islands 2Bulgaria 1 A 15 15Canada 1 C 15 15Cayman Islands 2Chile 1 C 15 5 25% voting powerChina 1d) A 15 15Cook Islands 2Croatia 1a) A 15 15Cyprus 1/3c) C 5 0 50% voting powerCzech Republic 1 C 15 0 10% capital participationDenmark (see Nordic countries)Egypt 1/3 A 15 15Estonia 1 C 15 5 25% capital participationFaeroe Islands (see Nordic countries)Finland (see Nordic countries)France 1 C 15 0

525% of the share-capital>10%, <25% of the share-capital

Gambia 1 C 15 5 25% capital participationGermany 1/3 A 15 0 25% capital participationGibraltar 2Greece 1 C 20 20Greenland 1 CGrenada 3Guernsey 3Hungary 1 C 10 10Iceland (see Nordic countries)India 1/3 C 25 15 25% capital participationIndonesia 1 A 15 15Iran 3Ireland 1 C 15 5 10% voting powerIsrael 1 A 15 5 50% voting powerItaly 1/3 A 15 15Ivory Coast 1 A 15 15Jamaica 1 A 15 15



Appendix D - Tax treaties at February 18, 2010

Country Withholding tax ratesMain

methodOrdinary

ratesParent/

subsidiaryParent/subsidiary raterequirementsStatus

Japan 1 C 15 5 25% voting powerKasakhstan 1 C 15 5 10% capital participationKenya 1 A 25 15 25% voting powerLatvia 1 C 15 5 25% capital participationLebanon 3Liechtenstein 3Lithuania 1 C 15 5 25% capital participationLuxembourg 1 C 15 5 25% capital participationMakedonia 3Malawi 1/2c) C 5 0 50% voting powerMalaysia 1/3 A 0 0Malta 1/3 A 15 15Marocco 1 A 15 15Mauritius 3Mexico 1 C 15 0 25% capital participationMonaco 3Nepal 1 C 15 5

1025% of the share-capital>10%, <25% of the share-capital

Netherlands 1 C 15 0 25% capital participationNetherlands Antilles ½ A 15 5 25% capital participationNew Zealand 1 C 15 15Nordic countries 1 C 15 0 10% capital participationPakistan 1 A 15 15Philippines 1 A 25 15 10% capital participationPoland 1/2 C 15 5 25% capital participationPortugal 1/3 A 15 10 25% capital participationQatar 1Romania 1 C 10 10Russia 1 C 10 10Saint Lucia 3Samoa 2San Marino 3Senegal 1 C 16 16Serbia 1 a) A 15 15Sierra Leone 1 c) C 5 0 50% voting powerSingapore ½ C 15 5 25 % capital participationSlovak Republic 1 b) C 15 5 25% capital participationSlovenia 1a) A 15 15South Africa 1 C 15 5 25 % capital participationSouth Korea 1 A 15 15Spain 1 C 15 10 25% capital participationSri Lanka 1 A 15 15Sweden (see Nordic countries)Switzerland 1/2 C 15 0 20% capital participationTanzania 1 C 20 20Thailand 1 C 15 10 10 % capital participationTrinidad and Tobago 1 A 20 10 25% voting powerTunisia 1 A 20 20Turkey 1/2 A 25 20 25% capital participationTurks & Caicos Islands 2Uganda 1 C 15 10 25% capital participationUkraine 1 C 15 5 25 % capital participationUnited Kingdom 1 C 15 5 10% voting powerUSA 1/3 A 15 15Venezuela 1 C 10 5 10 % capital participationVietnam 1 C 15 5

1070% of the share-capital>25%, <70% of share-capital



Appendix D - Tax treaties at February 18, 2010

Country Withholding tax ratesMain

methodOrdinary

ratesParent/

subsidiaryParent/subsidiary raterequirementsStatus

Yugoslavia 1 a) - 25 25Zambia 1 A 15 15Zimbabwe 1 A 20 15 25% capital participation

1) The treaty is in force2) The treaty is signed but not yet ratified / not yet in force3) The treaty is being renegotiated / is under negotiation

a) The tax treaty between Norway and Yugoslavia of 1 September 1983 is temporarily suspended. By the exchangeof notes the treaty has been given effect for Croatia as from 6 March 1996, for Slovenia as from the date ofindependence of the Republic of Slovenia, for Serbia from March 29, 2003 and for Bosnia Hercegovina as from thefiscal year 2009

b) The tax treaty between Norway and Czechoslovakia of 27 June 1979 will temporarily apply for the Slovak Republicc) The treaty with United Kingdom also covers Cyprus, Malawi and Sierra Leoned) The treaty with China does not cover Hong Kong

A) The method of apportionmentC) Credit method

A separate method may be used for salaries; contact us for more information



Appendix E – Considerations when doing business in Norway(not necessarily exhaustive)

• Is a work permit necessary?- see details in paragraph 13

• Is registration of persons with the local police and/or tax authorities necessary?- see details in paragraph 13

• Is the Central Office – Foreign Tax Affairs (COFTA) informed about all contractsand any subcontracts given to foreign businesses or foreign self-employedpersons, provided that the contract is performed on a site for building andassembly work in Norway, or on a site that is under the client’s control in Norway,or on the Norwegian Continental Shelf?- see details in paragraph 13

• Has the client/principal and/or the contractor given information about persons whoare employed by the contractor and working on the contract in question?- see details in paragraph 13

• Are employees taxable to Norway and must local personal tax returns beprepared? (people hired out from abroad are taxable to Norway from day 1 andsubcontracted (leased) labour follow the 183/270 days rule)- see details in paragraph 9

• Is there a “permanent establishment” in Norway, is there a Norwegian CFC, arethe company’s activities taxable to Norway and must a corporate tax return beprepared?- see details in paragraph 6 and 13

• Must Norwegian social security be paid by the employer and/or employee?- see details in paragraph 8

• Must the company and the employees be registered in the Aa- (employer/employee) register? (to enable the tax authorities to issue tax deduction cards). Ifregistration is necessary, the company must first register in the CCRLE (seeparagraph 3) to obtain an organisation number. Registration is done automaticallyin the Aa-register if information of employees in Norway is given to CCRLE- see details in paragraph 9

• Is the company liable to VAT in Norway? (foreign businesses engaged inactivities which are liable for VAT registration must calculate and pay VATaccording to the same rules as Norwegian businesses – normally every 2months)- see details in paragraph 10

• Must bookkeeping be performed according to the Norwegian Bookkeeping Act?- see details in paragraph 4

• Must local financial statements be prepared? (statutory accounts (filed with TheRegister of Annual Company Accounts) or ”Extract of accounts” to COFTA (fortemporary activities in Norway or activities on the Norwegian Continental Shelf inexcess of NOK 5 millions)- see details in paragraph 4

• Is a statutory audit mandatory? - see details in paragraph 5

PLEASE CONTACT THE LOCAL MOORE STEPHENS-OFFICE IN TIME TO DISCUSSNECESSARY ACTION



Appendix F – Specimen audit opinion

INDEPENDENT AUDITOR’S REPORT

Report on the Financial StatementsWe have audited the accompanying financial statements of ABC Company, which comprise thebalance sheet as at December 31, 201X, and the income statement, [statement of changes inequity] and cash flow statement for the year then ended, and a summary of significant accountingpolicies and other explanatory information.The Board of Directors and the Managing Director’s Responsibility for the Financial StatementsThe Board of Directors and the Managing Director are responsible for the preparation and fairpresentation of these financial statements in accordance with the Norwegian Accounting Act andaccounting standards and practices generally accepted in Norway, and for such internal control asthe Board of Directors and the Managing Director determine is necessary to enable the preparationof financial statements that are free from material misstatement, whether due to fraud or error.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with laws, regulations, and auditing standards and practicesgenerally accepted in Norway, including International Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’s judgment,including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.OpinionIn our opinion, the financial statements present fairly, in all material respects, (or give a true and fairview of) the financial position of ABC Company as at December 31, 201X, and (of) its financialperformance and its cash flows for the year then ended in accordance with the NorwegianAccounting Act and accounting standards and practices generally accepted in Norway.

Report on Other Legal and Regulatory RequirementsOpinion on the Board of Directors’ reportBased on our audit of the financial statements as described above, it is our opinion that theinformation presented in the Board of Directors report concerning the financial statements (,/and)the going concern assumption [, and the proposal for the allocation of the profit/coverage of theloss] is consistent with the financial statements and complies with the law and regulations.Opinion on Registration and documentationBased on our audit of the financial statements as described above, and control procedureswe have considered necessary in accordance with the International Standard on AssuranceEngagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of HistoricalFinancial Information», it is our opinion that the company’s management has fulfilled its duty toproduce a proper and clearly set out registration and documentation of the company’s accountinginformation in accordance with the law and bookkeeping standards and practices generallyaccepted in Norway.



Appendix G – Challenging requirements in the bookkeeping regulationsIs the following accounting material produced:- detailed journals/specifications of all transactions/entries for each accounting period? (in systematic order

specifying the documentation date and reference, assignment codes and other relevant processing codes)- detailed general ledger (with all transactions sorted by g/l account for each accounting period) including

specification for each account of the account code and account name, all items in systematic order specifyingthe documentation date and documentation reference, other relevant processing codes and opening andclosing balances)

- detailed accounts receivable/customer subledger (with all transaction sorted by customer for each accountingperiod) stating the customer code and name, all items in systematic order specifying the documentation dateand documentation reference and opening and closing balances

- detailed accounts payable/supplier subledger (with all transaction sorted by supplier for each accountingperiod) stating the supplier code, name and organisation number, all items in systematic order specifying thedocumentation date and documentation reference and opening and closing balances

- detailed lists of withdrawals for owners, partners and own business (all withdrawals of assets and servicesspecified by owner, partner or own business in systematic order at fair value with the documentation date anddocumentation reference)

- detailed lists of all sales to owners and partners in enterprises with fewer than ten owners or partners (allsales of goods and services specified by owner or partner in systematic order stating the documentation dateand documentation reference; even though the owners or partners are acting as consumers) detailed lists ofsales and other transactions/payments/benefits to leading personnel. All sales of goods and services toleading personnel must be specified by employee in systematic order stating the documentation date anddocumentation reference. This applies even though such leading personnel are acting as consumers)

Are all accounting vouchers numbered with a two-way control path (audit trail) between the detailed generalledger journals/specifications, the physical accounting vouchers and the required financial reports?

Are specification of benefits/payments liable for inclusion in the year end certificate of pay and tax deducted (paystatement) prepared? (benefits/payments liable for inclusion in the pay statement by period and by the accountsin the accounting system. It shall also be possible to specify benefits/payments liable to payment of employers’national insurance contribution in total, by contribution rate and municipality)

Are all balance sheet items documented/specified at year end (unless they are immaterial) and is thedocumentation stored for 10 years?

Is the accounting system documented (including any cash sale systems) describing the possibilities for controland how system-generated items can be checked, including relevant codes and fixed data, if this is necessary toenable the entries to be controlled)?

Timing and frequency of bookkeepingAre all transactions booked within the deadlines for financial reporting (every 2nd month + 40 days for VAT-registered entities; except VAT-registered entities with turnover below 1 mill NOK, if a yearly VAT-return isapproved; these entities can book transactions once a year if they have less than 300 transactions), every 4thmonth + 60 days if the number of transactions > 300 and only once a year if number of transactions < 300?

Printing of journals/specifications / “locking” of the accounting journalsAre all journals/specifications (including the detailed general ledger, customers/suppliers subledgers anddocumentation of hours (see below)) printed and “locked” after the end of each financial reporting deadline? (onlypaper and non-editable print files (including PDF-files) are accepted)

Bookkeeping periodAre all transactions booked based on the date on the documents (sales- and suppliers invoices must be bookedbased on the invoice date even if physical delivery is in another month) and are accruals/prepayments used atyear end to recognise the income in the month of delivery?

Deadline for the issuing of sales documentationIs sales documentation issued as soon as possible and one month at the latest after delivery? (services deliveredon a continuous basis (auditors, lawyers and consultants) shall be invoiced one month at the latest after expiry ofthe ordinary value added tax period, for services that are delivered on the basis of metering of actual consumption(electricity, telecommunications and similar), sales documentation can be issued for longer periods, limited to oneyear, for services that are delivered on the basis of a tender or equivalent pre-agreed price, the salesdocumentation can be issued in accordance with an agreement between the parties, unless the agreed invoicingdeviates materially from the actual progress and sales documentation for passenger transport, catering,subscriptions, rents, service charges and similar may be issued before delivery takes place, limited however to aperiod of one year)



Appendix G – Challenging requirements of the bookkeeping regulationsDoes the documentation of the sale of goods and services (the invoice) contain:- number and date of issue of the documentation- specification of the parties- nature and scope of the goods/service provided- time and place of the delivery of the goods/service- payment and due date for payment- VAT, if applicable, and other taxes relating to the transaction that are required to be specified pursuant to

legislation or regulations. VAT shall be specified in Norwegian kroner

Are customer and supplier specifications as mentioned above (including cash sales and purchases) preparedwhen the goods or services are intended for resale or as direct input factors in production or in the delivery ofservices, or when the payment is more than NOK 40 000 including VAT?

Are all cash sales (in which the purchaser’s payment obligation to the vendor is settled on delivery) registeredcontinuously in a cash register, terminal or other equivalent system with dated, numbered cash register tapes orequivalent reports that specify the time of each individual sale? (this does not apply to enterprises that engage inambulant or sporadic cash sales that, for such business, do not exceed three times the national insurance basicamount during the financial year). Are dated, numbered cash register tapes («Z reports«) or equivalent reports ofthe information registered in the cash register, terminal or equivalent system prepared daily and is thedocumentation/bookkeeping of the cash sales reconciled to the daily counting of the cash holding?

Is value added tax (VAT) specified/reconciled? (output and input value added tax and the basis for the calculationof the tax specified by period and by the accounts in the accounting system. The specification shall also show tax-free turnover and withdrawals, and turnover and withdrawals that fall outside the scope of the provisions of theVAT Act. It shall also be possible to specify input and output VAT by transaction)

Is the bookkeeping in the building and construction industry, organised in such a manner that it is possible toprepare separate specifications (project accounts) for projects whose tender price or estimated turnover valueexceeds NOK 300.000 excluding value added tax?

Are travel and subsistence expenses and hospitality expenses documented (including the purpose of spendingthe expenses and the person(s) that participated)?

Are satisfactory explanations and/or underlying documentation prepared for all internal entries and entriescorrecting previous entries?

Do enterprises that perform services where the remuneration is based on time consumption document thenumber of hours worked, sorted by client/customer, for each owner and employee?- the hours shall be specified per day, divided between internal time consumption and the individual customers/

assignments. The provisions also apply in cases where a fixed price has been agreed- internal/administrative hours can be registered as a total per day- the documentation must be prepared within the deadlines for financial reporting (see above)- the provisions do not apply to owners and employees who only perform administrative tasks internally

Are annual accounts and other statutory financial reporting, the annual report and the auditor’s report,specifications of statutory financial reporting as mentioned above, documentation of entries and deleted entries,documentation of the accounting system etc, documentation of the balance sheet and numbered letters from theauditor, stored in Norway for ten years after the end of the financial year?

Are agreements concerning the business (with the exception of agreements of minor importance),correspondence that provides important additional information in connection with an entry, outgoing packing slipsor corresponding documentation available on paper at the time of delivery and price lists, stored in Norway forthree years and six months after the end of the financial year?

Do entries which were initially electronically available remain electronically available for three years and sixmonths after the end of the financial year?

Do enterprises that keep their accounts abroad transfer the accounting material for storage in Norway within onemonth after the adoption of the annual accounts and no later than seven months after the end of the financialyear?

Are additional provisions and special rules for defined industries/sectors (including building and construction,taxis, hair care businesses, hairdressers and beauticians, service industries, businesses serving alcoholicbeverages, hotels and foreign companies and persons engaged in business activities on the NorwegianContinental Shelf) adhered to?



Appendix H – Information about Moore Stephens

Moore Stephens Norway DA is a non-operative umbrella company coordinating thenational and international activities of the Norwegian firms of accountants that havejoined forces in the Moore Stephens Norway association.

All member firms are independent entities, owned, controlled and managed locally,without any partnership between them. However, we actively strive to work together,sharing information, talent and know how.

The Norwegian firms are all independent members of Moore StephensInternational Limited, the 13th largest accounting and consulting associationworldwide with 638 offices in 97 countries and 20,600 partners and staff. Theassociation has 7,900 people in 324 offices and 163 firms in 40 countries in Europe,and it is among the 10 largest associations in the Nordic/Baltic region based onturnover.

Firms associated with Moore Stephens Norway DA:

• Veel Karlsen & CO ANS – OsloTullins gate 2, N-0166 OsloTelephone: +47 22 98 15 40 - http://www.veelkarlsen.no13 partners and employees – MS-member from 1998

The company's main activity is statutory audits including related tax- andconsulting work, concentrated in the Oslo-area.

• Profero Revisjon DA – OsloTullins gate 2, N-0166 OsloTelephone: +47 22 98 15 40 - http://www.proferorevisjon.no8 partners and employees – MS-member from 2006

The company's main activity is statutory audits including related tax- andconsulting work, concentrated in the Oslo-area.

• Moore Stephens Consulting AS – OsloTullins gate 2, N-0166 OsloTelephone: +47 22 98 15 40 - http://www.moorestephens.no

The company is owned 50/50 by Profero Revisjon DA and Veel Karlsen & CoANS. It’s main activity is corporate finance work, including investigations, duediligence, valuations and management for hire (including technical preparation oftax returns, interim accounts and financial statements for larger non-audit clients),concentrated in the Oslo area, but work is also performed country wide.



Appendix H – Information about Moore Stephens

The Norwegian associated firms have agreed on the following areas ofcooperation:• Professional training, conferences, meetings and courses• Quality control• Marketing (including brochures and “Doing-business-guides”)• Recruiting• Courses for clients• Newsletters• Information technology (hardware, software and websites)• Development of audit methods and technical material

Moore Stephens Norway associated firms can help you in the following areas: Starting a business

- drafting of memorandum and articles of association- registration- assistance in obtaining necessary permits

Running a business- financial reporting to parent company- tax returns- statutory accounts- special projects (including installation of new accounting systems)

Taxation- corporate tax- international tax- tax returns- tax planning- VAT registration- custom and duties

Audit and assurance services- statutory annual audit- special purpose audits

Corporate finance and other services- mergers and acquisitions- business valuations- due diligence work- forensic, insolvency and other investigations- outsourcing of accounts preparation and tax return preparation- management for hire

Closing a business- liquidation audits- statutory accounts/reports- tax returns

Services for individuals- registrations- help in obtaining permits (if required)- social security- personal taxes- VAT (if self-employed)- pensions



Notes

Contact: Kåre KjøllesdalTel: +47 22 98 15 40 • Fax: +47 22 98 15 41

E-mail: [email protected]: www.moorestephens.no

Tullins gate 2, N-0166 Oslo, Norway

MOORE STEPHENS NORWAY DA

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