With the significant increase in both activity and confidence in the North Sea, and the strong business ties between the UK and the Scandinavian countries of Norway and Denmark, we have seen an increase in business activity through 2018, and continuing into 2019. Whilst this is undoubtedly good news for business, companies do need to be aware of their associated tax reporting obligations.
Companies may be caught unaware when undertaking work in Norway or Denmark, either offshore or onshore, that this can trigger both personal and corporate tax liabilities which are required to be reported and paid timely. A business may not have had any tax liability in prior years due to a low number of days present in Norway or Denmark. However, if companies unintentionally or unwittingly exceed the days threshold in Norway or Denmark or trigger a tax liability under domestic legislation or the double tax treaties, there will be filing obligations and perhaps tax liabilities.
In addition, there will be considerations as to whether the overseas tax paid can be relieved against UK taxes, to minimise double taxation.
Companies who are performing work under a hire of labour contract or renting equipment in Norway will still have a filing obligation, albeit no Norwegian tax would be payable.
Failure to submit returns and pay resultant liabilities can incur significant penalties and give rise to other associated issues.
If your company has worked in either Norway or Denmark (or in Norwegian or Danish waters) during 2018, then we recommend action is taken now. The Corporate Tax reporting deadlines are fast approaching, with Norway filings required by 31 May 2019 and Denmark following shortly after on 30 June 2019.
Here at AAB, we are experts in advising companies that have, or are considering, work in overseas locations and in particular, Norway and Denmark. On a daily basis, we assist companies in assessing their obligations and supporting them in making all necessary tax filings and payments, ensuring the process is as seamless and painless as possible.
If you require support in this area, please contact Ruth MacNamee (firstname.lastname@example.org) or your usual AAB contact.
To find out more about Ruth and AAB’s International Tax Team, please click here.