On 14 March 2013 the UK signed a new double taxation treaty with Norway. When the treaty enters into force it will replace the current treaty which was signed in 2000. The treaty generally follows the provisions of the OECD Model and incorporates the latest OECD provisions in respect of business profits, exchange of information and assistance in collection of taxes.

The definition of a permanent establishment includes an enterprise that performs services in the other contracting state through an individual who is present there for more than 183 days in any twelve month period, where more than 50% of the gross revenues from active business activities of the enterprise during the period are derived from the services performed in the other state through that individual.

An Article in respect of offshore activities provides that where offshore activities are carried on in the other contracting state the enterprise is deemed to be operating through a permanent establishment. This does not apply if the activities continue for less than thirty days in a twelve month period.

The new treaty introduces a zero withholding tax for dividends paid to a company that owns directly or indirectly at least 10% of the share capital of the company paying the dividend, or for dividends paid to a pension scheme. In the case of other dividends the maximum withholding tax rate is 15%.  No withholding tax applies to interest or royalty payments.

The article in respect of the mutual agreement procedure provides for the matter to be submitted to arbitration at the request of the taxpayer if the competent authorities have not reached agreement within two years from the presentation of the issue. The arbitration decision is to be binding on both contracting states and implemented regardless of any time limits in their domestic laws.