On 12 April 2023, the Norwegian Ministry of Finance launched a public consultation providing a proposal to change the interest limitation rules, which generally limit the deduction of interest expenses for related parties that exceed 25% of EBITDA when annual net interest expenses exceed NOK 5 million. For consolidated groups, a higher interest expense threshold of NOK 25 million applies, but the deduction limitation applies to interest expenses from both related and unrelated parties.
The proposal is in line with the BEPS recommendations and would be a compulsory feature of interest limitation rules if Norway were required to comply with the EU’s Anti-Tax Avoidance Directive (ATAD). In addition, the Department is proposing adjustments to the regulations regarding adjustment options that exist in the current regulations, including adjusting which interest costs are covered by the EBITDA rule between related parties and adjusting the types of group contributions deducted from the deduction limit.
Consultations are open for feedback until 12 July 2023.
