Norway - Pricing Norway - Pricing
Norway’s corporate tax rates are lower than the EU average. Both companies and branches are subject to income and capital tax. An income tax of 22% applies generally to all forms of income of corporate bodies and other entities liable to taxation. No tax allowances are provided.
Please note that because of the extraordinary returns on production of petroleum resources, the oil companies are subject to an additional special tax. On top of the ordinary company tax rate of 22 %, there is a special tax rate of 56%. This gives a marginal tax rate of 78 %. In general, only the company's net profit is taxable. Deductions are allowed for all relevant costs, including costs associated with exploration, R&D, financing, operations and decommissioning.
The Norwegian personal income tax system has two bases for income. The ordinary income base is a net base (after allowable deductions) and is taxed at a rate of 22% in 2019. In addition, Norway has the personal income base, which serves as a gross base for taxation. Top tax (marginal income tax) and social security contributions for employees are based on this.
The top tax (marginal income tax) rates are progressive, and are as follows for 2019:
- Income from NOK 174,500: 1.4%
- Income from NOK 245,650: 4.2%
- Income from NOK 617,500: 13.2%
- Income above NOK 964,800: 16.2%
The value-added tax (VAT) is 25% on most goods and services, but is 15% on food items and non-alcoholic beverages, and 8% for personal transport services, movie theater tickets and hotel rooms.
There are high taxes on automobiles (except for electric cars, which are tax free), gasoline, real estate, financial assets, and other items. Overall, government revenues equal half of GDP. Disposable income is much lower than apparent income per capita, but this is offset to some extent by generous state benefits such as mostly free health care, free tuition at public schools and universities, grants for children, high state pensions (social security), etc.
A revised convention for the avoidance of double taxation between the United States and Norway came into force in 1972. It applies to national income taxes in the United States and Norway as well as local income taxes in Norway. The law covers both individuals and corporations in the two countries. For Norwegian taxation purposes, the key is whether an American enterprise operates in Norway through a permanent establishment (article 4 of the convention), defined as a fixed place of business through which a resident of one of the contracting states engages in individual or commercial activity. If so, then all industrial and commercial profits made in Norway are taxable by the Norwegian government (and exempt from taxation by the United States). The identical rule applies to Norwegian-operated permanent establishments in the United States.