Norway’s Ministry of Finance has initiated a public consultation on proposed changes to the Norwegian Tax Act. These amendments limit the deductibility of debt and interest expenses for financial institutions operating abroad.
The proposed amendments focus on cases where income from foreign business activities is exempt from Norwegian tax under a tax treaty.
According to the proposal, debt and interest expenses for financial institutions shall be distributed between Norway and foreign jurisdictions under the tax treaty’s rules on the allocation of business profits. As a result, debt and interest on debt associated with a permanent establishment in another country will no longer be deductible from income subject to taxation in Norway.
The proposal stems from the Supreme Court’s ruling on 12 November 2024, which allowed a Norwegian bank to claim substantial interest deductions in Norway, despite the interest not being tied to taxable income within the country. In response to this judgment, the Ministry has identified several weaknesses in the existing regulations, particularly those impacting financial institutions.
To submit a consultation statement, visit the consultation page at www.regjeringen.no. Use the digital platform by selecting “Submit consultation responses.” Please note that consultation statements are public under the Public Access Act and will be published on the website.
The deadline for submitting comments on the consultation is 15 June 2025.
