Norway has concluded numerous tax treaties to eliminate double taxation. Most of the treaties address Norwegian capital and income taxes paid to the state and to the municipalities, but do not address indirect taxes such as VAT, investment tax or social security contributions. Most of the treaties concluded in recent years also apply to activities on the Norwegian Continental Shelf.
To avoid double taxation, most of the treaties that are signed generally use the exemption method, but use the credit method for dividends and income derived from the Norwegian Continental Shelf. The treaties that Norway sign today are generally based on the crecit method.
In its more recently negotiated tax treaties, Norway has reserved the right to change from the exemption-of-income method to the credit-against-tax method after notifying the other party to the treaty.
Norwegian legislation is required to establish Norwegian tax liability. Tax treaties may not extend such liability, but can restrict it. The treaties that Norway sign today are generally based on the credit method.
TREATY WITHHOLDING TAX RATES
For treaty countries, the following rates reflect the lower of the treaty rate and the rate under domestic law on outbound payments.
Dividends (%) Interest (i)(%) Royalties (i)(%)
Australia 15 0 0
Austria 5 (a) 0 0
Azerbaijan 10 0 0
Barbados 5 (b) 0 0
Belgium 5 (a) 0 0
Benin 20 0 0
Brazil 15 0 0
Bulgaria 15 0 0
Canada 15 0 0
China 15 0 0
Cote d'Ivoire 15 0 0
Cyprus 0 (f) 0 0
Czechoslovakia (c) 5 (a) 0 0
Denmark
(Nordic Treaty) 0 (b) 0 0
Egypt 15 0 0
Estonia 5 (a) 0 0
Faroe Islands
(Nordic Treaty) 0 (b) 0 0
Finland
(Nordic Treaty) 0 (b) 0 0
France 0 (h) 0 0
Gambia 5 (a) 0 0
Germany 5 (a) 0 0
Greece 20 0 0
Hungary 10 0 0
Iceland
(Nordic Treaty) 0 (b) 0 0
India 15 0 0
Indonesia 15 0 0
Ireland 0 (a) 0 0
Israel 5 (l) 0 0
Italy 15 0 0
Jamaica 15 0 0
Japan 5 (a) 0 0
Kenya 15 0 0
Korea 15 0 0
Latvia 5 (a) 0 0
Lithuania 5 (a) 0 0
Luxembourg 5 (a) 0 0
Malawi 0 (f) 0 0
Malaysia 0 0 0
Malta 15 0 0
Mexico 0 (a) 0 0
Morocco 15 0 0
Nepal 5 (g) 0 0
Netherlands 0 (a) 0 0
Netherlands Antilles 5 (a) 0 0
New Zealand 15 0 0
Pakistan 15 0 0
Philippines 15 (k) 0 0
Poland 5 (a) 0 0
Portugal 10 (a) 0 0
Romania 10 0 0
Senegal 16 0 0
Sierra Leone 0 (f) 0 0
Singapore 15 0 0
South Africa 5 (a) 0 0
Spain 10 (l) 0 0
Sri Lanka 15 0 0
Sweden
(Nordic Treaty) 0 (b) 0 0
Switzerland 5 (a) 0 0
Tanzania 20 0 0
Thailand 20 0 0
Trinidad and Tobago 10 (a) 0 0
Tunisia 20 0 0
Turkey 20 (a) 0 0
Ukraine 5 (a) 0 0
USSR (d) 20 0 0
United Kingdom 5 (b) 0 0
United States 15 0 0
Vietnam 5 (j) 0 0
Yugoslavia (e) 15 0 0
Zambia 15 0 0
Zimbabwe 15 0 0
Nontreaty countries 25 0 0
(a)The treaty withholding rate is increased to 15% (or other rate as indicated below) if the recipient is not a corporation owning at least 25% of the distributing corporation.
Ireland 10%
Trinidad and Tobago 20%
Turkey 25%
(b)The treaty withholding rate is increased to 15% if the recipient is not a corporation owing at least 10% of the voting power of the distributing corporation.
(c)Norway honors the Czechoslovakia treaty with respect to the Czech and Slovak Republics.
(d)The Russian Federation is the only republic of the former USSR that honors the USSR treaty. Other cases are dealt with individually by the authorities, except for Azerbaijan, Estonia, Latvia, Lithuania and Ukraine, which have entered into tax treaties with Norway.
(e)Norway honors the Yugoslavia treaty with respect to Croatia and Slovenia. Other cases are dealt with individually by the authorities.
(f)The treaty withholding rate is increased to 5% if the recipient is not a company holding at least 50% of the voting power of the distributing corporation.
(g)The 5% rate applies if the recipient is a company owning at least 25% of the distributing company. The rate is increased to 10% if the recipient is a company owning at least 10%, but less than 25%, of the distributing company. For other dividends, the rate is 15%.
(h)In general, the treaty withholding rate is increased to 15% if the recipient is not a corporation owning at least 25% of the distributing company.
However, the rate is 5% if the recipient is a French corporation owning at least 10%, but less than 25%, of the distributing company.
(i)Interest and royalties are not subject to withholding tax under Norwegian domestic law.
(j)The 5% rate applies if the recipient of the dividends owns at least 70% of the capital of the Norwegian payer. The rate is increased to 10% if the recipient owns at least 25%, but less than 70%, of the Norwegian payer. For other dividends, the rate is 15%.
(k)The rate is increased to 25% if the recipient is not a company owning at least 10% of the distributing company.
(l)The rate is increased to 15% if the recipient is not a company owning at least 50% of the voting power of the distributing company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Unni Bjelland, Ernst & Young, Tel: +472 203 6000 or Fax: +472 203 6370.
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