Norway

U.S. and Norway sign agreement on the exchange of CbC reports

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According to an IRS announcement on its website, the competent authorities of the U.S. and Norway have concluded an arrangement on the exchange of Country-by-Country Reports. The competent authority arrangement (CAA) for exchange of country-by-country reports is on the basis of a double tax convention (DTC). The agreement was signed on 26 April 2017.

Under the arrangement, the first fiscal year for which the U.S. and Norway intend to exchange CbC reports is the fiscal year of MNE Groups commencing on or after January 1, 2016. The CbC reports are intended to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC report relates. CbC reports with respect to fiscal years of MNE Groups commencing on or after January 1, 2017 are intended to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE Group to which the CbC report relates.

The Competent Authorities intend to exchange the CbC Reports automatically through a common schema in Extensible Markup Language (XML).

DTA Negotiation between China and Norway underway

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On 7 July 2017, the Finance Ministers of China and Norway met in Hamburg in the margins of the G20 Summit. The ministers discussed the global economic situation and the strong economic links between the two countries.

The ministers also recognized the importance of starting negotiations on the update of the tax treaty between the two countries when necessary.

Finance Minister Siv Jensen said, “Since the present tax treaty was signed in 1986 there has been a substantial development in the economic relationship between our two countries and the international framework for tax. A modernization and customization of the treaty, especially to avoid double taxation, would further promote trade and investments between China and Norway”.

Norway proposes changes to the earnings stripping rules

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Norwegian Ministry of Finance has issued a discussion paper on 4th May 2017, that proposes changes to the earnings stripping rules which further extends the limitation to also include interest costs on unrelated party debt at 25% .  The new proposed rules issue for one exception according to which the taxpayers are capable to document that the equity ratio of the company is not lower than the equity ratio reported in the integrated financial statements. The amendment would be effective from 1 January 2018, if passed.

Norway: Exemption from withholding tax applies

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The tax authorities released a “binding advance ruling” (BFU / 17, 4 May 2017) regarding application of a domestic exemption from dividends to an Irish holding company. The judgment provides that the dividends paid by the Norwegian company to the Irish holding company are exempt from Norwegian withholding tax under the domestic exemption from Norway. To be qualified for the withholding tax exemption, the dividend recipient must be practically identical to certain non-individual assessable person according to the Norwegian Tax Act.

The withholding tax exemption applies to EEA resident corporate shareholders, but the exemption does not apply for the lowly taxed recipient. The shareholder must also be engaged in genuine business activity through an establishment in an EEA country. In addition, the shareholder must be the final recipient of the dividends. Furthermore, the exemption applies to non- individual dividend recipients comparable to Norwegian stock venture funds, associations, estates in bankruptcy, municipal and state-owned companies, shared insurance agencies and Savings Banks and other self-owned finance companies.

 

Norway proposes new corporate residency rules

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The Finance Minister opened a public hearing regarding the corporate tax residency rules under section 2-2 of the Tax Law (Skatteloven) on 16 March 2017. There is no definition of residence is available now in the Norwegian tax legislation for legal entities. Generally the place of residence depends on the location of the central management and control of the company basically where the central business decisions of the company are made. However, a company is normally deemed to be a resident if it is incorporated under Norwegian law.

According to the hearing, section 2-2 of the Tax Law should be amended and the term “residence” would include companies established in Norway and companies having their effective management in Norway. The amendments will be effective from fiscal year 2018.

 

TIEA between Norway and UAE enters into force

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The Exchange of Information Agreement regarding tax matters (TIEA) between Norway and the United Arab Emirates that was signed in 2015 entered into force on 15th February 2017. This treaty generally applies from 15th February 2017 for criminal tax matters and from 1st January 2018 for other tax matters. The agreement was ratified by the United Arab Emirates on 15th January 2017.

TIEA between Singapore and Norway enters into force

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Competent authority agreement on automatic exchange of information (TIEA) of 2016 between Norway and Singapore has been entered into force on 31st January 2017 regarding tax.

The agreement is intended to ensure that Norway and Singapore will be able to start the automatic exchange of financial account information as of 2018 according to the OECD Automatic Exchange of Information Agreement (MCAA) of 2014, based on the Council of Europe – OECD Convention on Mutual Administrative Assistance in Tax Matters (MAA) of 1988. This TIEA of 2014 has been amended by the 2010 protocol.