On 13 August 2019, the Ministry of Finance published a proposal to amend the group contribution rules regarding EFTA Court rule of 13th September 2017, which found that Norway’s rule violated freedom of establishment rights in cases where there is a final loss in a subsidiary established outside Norway. The proposal includes a limited right to deductions for group contributions from a Norwegian company to its foreign subsidiary.

An access to free use of group contributions across cross borders would give MNEs great freedom to decide for themselves what percentage of profits earned in Norway will be taxed here. This would provide an opportunity to reduce the Norwegian tax base by moving profits from Norway to countries with lower taxation. It is therefore necessary to maintain the general principle that the group contribution rules should only apply between Norwegian companies.

The consultation memorandum proposes that the group contribution rules be expanded to allow deductions for group contributions to foreign subsidiaries resident in an EEA country. In accordance with the EFTA Court’s decision, it is further proposed to limit the right of deduction to cases where the group contribution covers a final loss in the foreign subsidiary.

The deadline for comments is 13 November 2019.