Concept and Regulation in Norway

Section 13-1 of the Norwegian Tax Act (NTA) is the most relevant transfer pricing legislation in Norway.

Norway introduced transfer pricing documentation requirements with effect for the fiscal year 2008. However, this country has not had significant revisions regarding mandatory documentation requirements.

In 2020, the NTA helped the Finance Ministry evaluate current rules on transfer pricing documentation. As of this March, the Finance Ministry has not proposed any changes to the current documentation standards.

Since 2020, the NTA has revised and expanded the transfer pricing section in its tax manual (Skatte-ABC). This manual serves as a guide to the Tax Directorate. However, the OECD Transfer Pricing Guidelines are incorporated into the Norwegian Tax Act, being the guidance provided in the tax manual as a summary of certain important transfer pricing issues.

Arm’s Length Principle: Concept

In Norway, the Arm’s Length standard for transactions with related parties is stated in the General Tax Act 1999, Section 13-1.

This principle set out in the transfer pricing requirements is the main guideline for determining whether a transaction between related parties is acceptable for tax purposes.

Definition of Related Parties in Norway

There is no explicit definition in Norwegian law of related parties. However, with the duty to specify and document related party transactions, associated entities are defined in Section 4-12, No. 4 of the Tax Assessment Act:

  • Any company or entity which is, directly or indirectly, at least 50% owned or controlled by the entity required to specify or document.
  • Any individual, company, or entity that, directly or indirectly, has at least 50% ownership or control over the entity required to specify or document.
  • Any company or entity which is, directly or indirectly, at least 50% owned or controlled by any entity considered an associated party.
  • Any parent, sibling, child, grandchild, spouse, cohabitant, parent of a spouse, and parent of a cohabitant of any individual considered an Associated Party, as well as any company or entity which is, directly or indirectly, at least 50% owned or controlled by such persons.

Transfer Pricing Methodology in Norway

There is no specific reference to any transfer pricing method in Norwegian legislation. There is only a general reference to the OECD Guidelines in the Tax Act Section. The most appropriate method should be applied to any given transaction.

Transfer Pricing Documentation in Norway

Special transfer pricing documentation is only required to be filed if requested by the tax authorities. If requested, the documentation must be filed within 45 days after the request is made. The documentation will be prepared in Norwegian, Swedish, Danish, or English and kept for a minimum of 10 years after the end of the income year.

Controlled Operations Form (RF-1123)

Foreign companies and other businesses with controlled transactions with a combined fair value of NOK 10 million (Norwegian kroner) or more in the tax period or accounts receivable, debts, and guarantees with a combined value of NOK 25 million or more at the end of the tax period.

The Controlled Transactions form must be filed as an annex to the tax return.

Companies and other entities that, along with their associates, have fewer than 250 employees and total sales revenues not exceeding NOK 400 million or a general balance sheet not exceeding NOK 350 million are exempted from the obligation to document.

This exception does not apply to companies and other entities with transactions with companies domiciled in a state from which Norway cannot require tax information.

Country by Country Report

All multinational groups with annual consolidated group revenues equal to or greater than NOK 6. 500 million are required to file a Country-by-Country Report each December 31.

The Country-by-Country Report must be filed in the jurisdiction where the ultimate parent company of the group is a tax resident and must be exchanged with the jurisdiction where the group operates through information exchange agreements. In certain situations, other group members may be required to file a country-by-country report.

Sanctions related to Transfer Pricing

The Norwegian tax authorities could apply sanctions to a taxpayer in case of non-compliance with rules specifically related to transfer pricing documentation or the provision of additional information upon request. Such penalties may include a notice of infringement (surcharge), periodic penalty payments, and tax fines.

However, although a sanctioning tax is applied in some cases, tax authorities rarely impose surcharges or periodic penalty payments for insufficient information in transfer pricing documentation.

The taxpayer must file the transfer pricing documentation within 45 days following the request of the tax authorities and, rarely, an extension is granted within this period.

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 Author:       Wolfgang Hartl
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