Due to the close business links and increased work opportunities, Norway continues to be an attractive work location for UK companies. However, the Norwegian authorities have recently adopted a more aggressive stance on non-resident companies working in Norway, demanding that all such companies must submit Norwegian Corporation Tax Returns and pay the resulting Norwegian Corporate Tax if applicable. This stance is adopted whether a company is performing business activities in Norway or merely providing personnel to their Norwegian customers under a ‘Hire of Labour’ arrangement.
There has been an increase in the number of enquiries into businesses who have undertaken work in Norway in 2018 but have not completed a Norwegian Tax Return. This has resulted in the Norwegian authorities sending tax return and payment demands. This has been seen even if there is no liability to Norwegian Corporate Tax as a result of no direct services being performed in Norway. Along with the demands, harsh penalties of up to £4,000 have been applied for the perceived failure to comply and submit a Norwegian Tax Return. It is therefore essential that businesses are aware of their Norwegian compliance obligations.
We have seen a number of tax enquiries into the nature of the work being undertaken in Norway, with the Norwegian authorities adopting a differing approach on the work scope. Companies have seen demands for Norwegian Corporate Taxes followed by protracted and lengthy discussions with the Norwegian authorities in order to conclude the correct tax treatment. It is therefore crucial for businesses to understand whether they are performing services in Norway or if the work is a pure secondment of personnel, which will impact both the tax position in Norway.
If you have undertaken any work in Norway, you may have received tax return and payment demand letters. Even if no correspondence has been received as yet we would recommend that you discuss with us at AAB, so that we can help you comply and/or provide assistance and advice in corresponding with the Norwegian authorities.
We would encourage you to get in touch if you require support in this area, by contacting Ruth MacNamee (firstname.lastname@example.org) or your usual AAB contact. To find out more about AAB’s International Tax Team, please click here.
By Ruth MacNamee, Tax Manager at Anderson Anderson & Brown LLP
To find out more about Ruth and the International Tax Team, click here.