On June 22, 2012 the Norwegian tax authorities (Skatteetaten) announced total transfer pricing adjustments for 2012 of NOK 16.6 billion (approximately U.S. $ 2.8 billion / € 2.2 billion), whereas, in 2010, the total amount was NOK 8.5 billion.

In 2011, there were fewer, but more detailed and comprehensive, transfer pricing audits. However, although the number of audits decreased, the proceeds from adjustments in 2011 were double to the amount made in 2010.

The Norwegian tax authorities (NTA) follow closely the transfer pricing developments in the OECD and in other jurisdictions—both in terms of new regulations and areas of focus. The following discussion provides an update of transfer pricing-related activities in Norway.

New regulations

The NTA has focused on cash pooling arrangements. As a result, from 2011, companies must report if they take part in a cash pooling arrangement on Form RF-1123 (“Controlled transactions and accounts outstanding 2011”). This change is a consequence of the 2010 Court of Appeals decision in the Conoco Philips case. In that case the Court of Appeals concluded that a company participating in a cash pool must receive reasonable interest on its deposits, and there must also be a balance of benefits from the cash pool. If the Norwegian company does not obtain any advantages from the cash pool this will be considered as an income reduction and a transfer pricing adjustment is likely.

Loss-making enterprises

Companies with recurring losses were also an area of focus in 2012. A search in a relevant database by the NTA showed that there were several hundred Norwegian companies with losses over the past five years. The extent of losses will be further analysed by the transfer pricing team. The enterprises examined are expected to include permanent establishments (PEs) of non-resident companies in Norway.

Transfer pricing adjustments

According to the report, the proposed transfer pricing related adjustments made in 2011 would result in increased taxable income amounting to double  the adjustments made in 2010. Approximately NOK 15.3 billion of the proposed adjustments to taxable income are still disputed. Transfer pricing adjustments in 2012 are however expected to be lower than in 2011.

The 2011 adjustments cover enterprises that are subject to an additional 50% tax rate specified by the Petroleum Tax Act, as well as enterprises subject to the ordinary corporate tax rate of 28%.

MAP and APA

The Norwegian competent authorities concluded eight mutual agreement procedure (MAP) negotiations and initiated one MAP advance pricing agreement (APA) in 2011. In its 2010 annual transfer pricing report, the NTA indicated its intention to carry out pilot MAP APA projects.