BUSINESS ACTIVITIES IN NORWAY

BUSINESS ACTIVITIES IN NORWAY

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  1. Introduction
  2. ENKELTPERSONFORETAK
  3. AKSJESELSKAP
  4. NUF, A BRANCH OF A FOREIGN COMPANY
  5. WHAT TYPE OF BUSINESS TO CHOOSE?
  6. REGISTERING A COMPANY IN NORWAY
  7. WHICH COMPANIES IN NORWAY NEED PERMITS?
  8. FORMALITIES FOR RUNNING A BUSINESS IN NORWAY
  9. BUSINESS COSTS
  10. WHAT SOCIAL BENEFITS CAN A BUSINESS OWNER IN NORWAY BENEFIT FROM?
  11. EMPLOYER RESPONSIBILITIES
  12. INVOICES IN A NORWEGIAN COMPANY
  13. WHAT CAN BE DONE WHEN A CUSTOMER IS LATE WITH PAYING AN INVOICE?
  14. FINANCIAL CRISIS IN A NORWEGIAN COMPANY
  15. WHEN DOES A NORWEGIAN COMPANY BECOME A VAT PAYER?
  16. INCOME TAX IN NORWAY
  17. FERIEPENGER
  18. RETIREMENT IN NORWAY

In order to run a business and succeed professionally, a Norwegian entrepreneur needs basic knowledge of the applicable legislation. To spread your wings, you need to know what your rights and obligations are when doing business in Norway. On this page we have compiled detailed information on types of companies in Norway, business registration, the tax system and formalities for entrepreneurs.

ENKELTPERSONFORETAK

Business in Norway - ENK Those setting up their own business in Norway most often choose to open a sole proprietorship, or Enkeltpersonforetak (ENK). Registering an ENK company is not complicated and can be done electronically – via the Altinn portal. To register a company, you must have a Norwegian permanent personal number and MinID codes – the process takes 4-6 days.

Running an Enkeltpersonforetak means that there is no separation of assets between the owner's assets and the company's assets - the entrepreneur is liable for the company's obligations with all his or her assets.

Norwegian companies have a tax obligation. The entrepreneur should pay income tax of 22% on the company’s profit and social security contributions of 11.4% on the company’s profit within the deadlines set by the authority. Income tax is paid in the form of advance payments in four equal instalments. Advance income tax payments are determined by the Norwegian tax authority on the basis of a declaration of expected profit, which the entrepreneur should submit upon registration of the business and then at the beginning of each year. Business in Norway - deadlines If the company’s turnover exceeds NOK 50 000 in the following 12 months, the business must be entered in the VAT register. VAT payers are required to pay a certain amount of tax – VAT is settled through a tax return filed electronically (altinn.no). Business in Norway - VAT Employing staff means incurring additional costs in terms of paying employment taxes, paying salaries or employee training. Fixed costs: – employment levy (14.1% on gross salary), – pension insurance (min. 2% of gross salary), – feriepenger (min. 10.2% on gross salary). Variable costs are: – sickness benefits (the employer pays the benefit for the first 16 days of sick leave, nav.no), – accident and health insurance (depending on the type of work performed), – employee training, – work clothing, etc.

AKSJESELSKAP

Business in Norway - AS Setting up a limited company is quite time-consuming and involves some costs. The business must be registered with the Norwegian Register of Enterprises – Foretaksregisteret (brreg.no). The amount of stamp duty for registration depends on the method of application – NOK 5 570 for electronic registration and NOK 6 797 for registration at the office. To register a company, at least one of the registered shareholders should have a Norwegian permanent personal number.

Running a joint stock company means that the shareholders' assets are separate from the company's assets - Aksjeselskap's liabilities are only collected up to the company's share capital

Running an Aksjeselskap (AS) company implies compliance with reporting, bookkeeping and accounting requirements. In order to establish an AS company, it is necessary to have share capital of at least NOK 30,000 – the company’s share capital can be used to finance start-up and establishment costs. The company is also required to appoint a board of directors and to convene its meetings at least once a year. It is worth remembering that shareholders cannot freely dispose of company funds, and any movement of money should be properly documented.

An application for AS registration will not be accepted without proof of payment of share capital.

AS shareholder remuneration: – employee remuneration, – shareholder remuneration (styrehonorar), – dividend. Shareholders can employ themselves in their company. By doing so, they gain all employee rights and are therefore entitled to benefits: – salary, – holiday leave, – sick leave (sykepenger), – maternity leave, – compensation for accidents at work. If the company’s turnover exceeds the NOK 50,000 limit in the following 12 months, the business must be entered in the VAT register. VAT payers are required to pay a certain amount of tax – VAT is settled through a tax return filed electronically (altinn.no). Business in Norway - VAT

NUF, A BRANCH OF A FOREIGN COMPANY

Business in Norway - NUF A branch of a foreign company, i.e. Norskregistrert utenlandsk foretak (NUF), is established when a company has a permanent office in Poland, but intends to carry out orders in Norway. Opening a NUF requires registering the company in Brønnøysundregistrene (brreg.no) and in the Register of Business Entities – Enhetsregister and applying for a Norwegian organisation number. Documents relating to the business must be submitted: – articles of incorporation, – Articles of Association, – entry in the relevant register (KRS or CEIDG), – powers of attorney, – current address details of the company, and the planned branch: – full name of the branch, – scope of activity, – details of the owner/managers. An entrepreneur who has employees should report their stay in Norway to the Central Foreign Tax Office (SFU – Sentralskattekontoret for utenlandssaker) and the police. The owner of a foreign company’s subsidiary may appoint a representative to be responsible for the company’s tax and other obligations in Norway. The tax representative can be a person who permanently lives and works in Norway. If the turnover of the subsidiary exceeds NOK 50 000 in the following 12 months, the business must be entered in the VAT register. VAT payers are required to pay a certain amount of tax – VAT is settled through a tax return filed electronically (altinn.no). Business in Norway - VAT The NUF has financial responsibility in Norway and the home country. This means that the entrepreneur should carefully examine the double taxation agreement – so that he/she will know exactly the company’s tax liability in Norway, which depends on the nature and duration of the business.

WHAT TYPE OF BUSINESS TO CHOOSE?

Business in Norway - types of business Before setting up a business in Norway, it is important to decide on the type of business you want to conduct – this determines how you register your business and the associated formalities. It is advisable to think through the possible options and, in relation to the nature of your business, choose the most favourable one. Business in Norway - NUF Business in Norway - AS Business in Norway - ENK

REGISTERING A COMPANY IN NORWAY

Registering a company in Norway requires filling in the appropriate application form and receiving an organisation number. To set up a company, you need to submit the Samordnet registermelding form BR1010, available at brreg.no, to the office. On the form, you need to fill in information about the owner’s details, the company’s name and address and the type of business. Once the application has been submitted and the company’s registration confirmed, the Norwegian authority will assign the necessary organisation number for the business. An entrepreneur who has registered a business should also register the company in the relevant registers. Depending on the type and scope of activity, the company should be entered in the Norwegian Register of Employers and Employees – NAV – AA Registeret, the Register of Enterprises – Foretaksregisteret or the Register of VAT Taxpayers – Merverdiavgiftsregisteret. The registration of a public limited company (AS) requires the completion of additional documents: – opening balance sheet, – Memorandum of Association, – minutes of the meeting, etc. When owning a sole proprietorship (enk), it is good practice to set up a company bank account – bedriftskonto. This makes it possible to separate private and business transactions. To open an account, you will need to show the bank your business registration certificate and the organisation number you have been assigned. After the start of the business and then at the beginning of each year, the entrepreneur is required to declare the company’s projected income for the year. On the basis of the declaration of anticipated profit, the tax office calculates the amount of advance income tax, which is 22% on the company’s profit. If the company’s income in the following 12 months exceeds NOK 50,000, the entrepreneur should make an entry in the VAT register and pay the tax due at the specified amount. Business in Norway - VAT

WHICH COMPANIES IN NORWAY NEED PERMITS?

In order for a Norwegian company to start operations, it must be registered in certain registers. The obligation to register depends on the type and nature of the business. Every company should be registered in the Register of Business Entities – Enhetsregister. Companies, traders and Enkeltpersonforetak that have more than five employees must also be entered in the Register of Business Entities – Foretaksregister, and companies that are VAT payers in the Norwegian VAT Register – Merverdiavgiftsregisteret. Due to the specific nature of their business, owners of construction and cleaning companies are required to supply their employees with special industry cards. Byggekort is a badge for construction company employees – it is intended to increase work safety and control over companies in the construction sector. Renholdskort is an ID badge for employees of authorised cleaning companies, which is issued to confirm the legality of the business and the possession of the required permits. The industry cards are valid for two years and it is the employer who bears all costs associated with their purchase. Byggekort and Renholdskort are issued by EVRY CARD SERVICES AS (renholdskort.no, byggekort.no). Business in Norway -branch card

FORMALITIES FOR RUNNING A BUSINESS IN NORWAY

Starting a business requires a Norwegian entrepreneur to register the company with the authorities. After receiving an organisation number, it is possible to set up a company bank account – bedriftskonto – through which all company financial transactions should take place. This makes it easier to divide finances into personal and company accounts. Depending on the type and nature of the business, the company should be entered in the relevant registers. When the company’s turnover exceeds NOK 50,000 in the next 12 months, it should be entered in the VAT register – Merverdiavgiftsregisteret. If a company is engaged in trade, has more than five employees or is an AS company, it must be listed in the Trade Register – Foretaksregisteret. Companies that employ workers are required to be listed in the Employer Register – NAV Aa-registeret. Business owners should adhere to the deadlines set by the Norwegian authorities for providing the required documents and paying taxes. Documents: – annual settlement: print Skattemelding by the end of May of the following calendar year, – VAT return: every two months after registration in the VAT register. Taxes: – Income tax – Forskuddsskatt: calculated on the basis of the declared expected profit, paid in advance, – VAT (MVA): resulting from the submitted VAT return. Companies with employees should additionally pay employer tax – Arbeidsgiveravgift and advance payments of income tax for employees – Forskuddstrekk. The entrepreneur should remember to keep the company’s data up to date and, in the event of any changes, immediately inform the authorities, banks or contractors. Orderly accounting records – statements of company accounts, cost and income invoices or receipts for goods and services – are important in the event of an audit by the authorities, and payments should also be monitored and documented so that current liabilities and receivables can be supervised. The regulations in force in Norway impose an obligation on entrepreneurs to ensure safety at work. This requires an HMS course (occupational health and safety course), which provides the necessary knowledge related to ensuring safe working conditions. The course should be taken by business owners who employ or subcontract employees and by managers who are responsible for the safety of other employees. Due to the nature of their business, construction companies and authorised cleaning companies should provide their employees with industry-specific cards with basic information about the company and the employee in question. Byggekort is a badge for employees of construction companies and renholdskort is a badge for employees of cleaning companies. Business in Norway - what to remember

BUSINESS COSTS

Setting up a business in Norway requires registration with the relevant registers. Registration in the Register of Business Entities – Enhetsregister is free of charge, while registration in the Register of Enterprises – Foretaksregisteret is NOK 2 250 to NOK 2 832. When deciding to open a joint-stock company (AS company), it is necessary to bear in mind a minimum share capital of NOK 30 000 and a stamp duty of NOK 5 570-6 797 for registration in the Register of Enterprises – Foretaksregisteret (brreg.no). Norwegian companies are required to pay income tax of 22% on the company’s profit and to pay social security contributions of 11.4% on the company’s profit. If the company’s turnover has exceeded NOK 50,000 in the following 12 months, an entry must be made in the VAT register and the tax due must be paid at a certain rate. Business in Norway - VAT Return Companies with employees incur associated costs – fixed costs of approximately 26.3% on the gross wage bill and variable costs of 5% on average on the gross wage bill. Fixed costs: – employment levy (14.1% on gross salary), – pension insurance (min. 2% on gross pay), – feriepenger (min. 10.2% on gross salary). Variable costs are: – sickness benefits (the employer pays the benefit for the first 16 days of sick leave, nav.no), – accident and health insurance (depending on the type of work performed), – employee training, – work clothing, etc. Business owners in Norway should take care of health and safety at work. To do this, an HMS course (health and safety course) must be taken – at a cost of approximately NOK 1 500 (online course). The obligation to take the HMS course applies to business owners who employ or subcontract employees and to managers who are responsible for ensuring the safety of the company’s other employees. Construction companies and authorised cleaning companies should equip employees with industry cards with basic information about the company and the employee in question. Byggekort is a badge for employees of construction companies and renholdskort is a badge for employees of cleaning companies. The cost of producing an industry card is always borne by the employer. In addition to providing employees with industry cards, construction companies should also pay a fee to the RVO. The owner pays up to 0.03% of the gross wage of the employees (working directly on the construction site) – the minimum fee is NOK 250.

The amount of costs a Norwegian entrepreneur incurs depends on the nature of the business, its turnover and the number of employees.

WHAT SOCIAL BENEFITS CAN A BUSINESS OWNER IN NORWAY BENEFIT FROM?

Depending on the type of business, Norwegian business owners may benefit from social benefits such as sickness benefit and maternity benefit, and shareholders who have gained full employment rights through their employment in the company may also receive salary or benefit from annual leave.

Maternity allowance is available to women who have worked for a minimum of six months in the last ten months and whose income has reached a level on which pension contributions have been paid – this should be at least half the amount set by NAV – grunnbeløp.

Owners of sole proprietorships in Norway are entitled to sick leave – during this time, the business must not generate income or costs other than fixed costs (rent, telephone bills, internet). In the case of a 50% exemption, the business may generate income for work that is not covered by the exemption, such as office work.

Sick pay – sykepenger – is paid by NAV (the Norwegian Labour and Welfare Administration, nav.no) only from the 17th day of sick leave. The amount of sykepenger depends on the entrepreneur’s income base from the previous year.

EMPLOYER RESPONSIBILITIES

Business in Norway - Employment process Entrepreneurs with a business in Norway employing employees must be aware of the associated costs and additional formalities that need to be fulfilled. The costs that an employer incurs are related to employer taxes, employee insurance, work clothing and training costs. Employment taxes are the employer’s tax – Arbeidsgiveravgift (the tax rate depends on the zone membership) and the employee’s advance income tax – Forskuddtrekk.
ZONE WAGE ARBEIDSGIVERAVGIFT  IN COMPANY ARBEIDSGIVERAVGIFT RATE INAGRICULTURE AND FISHERIES
I 14,10% 14,10%
Ia 14,10% 10,60%
II 10,60% 10,60%
III 6,40% 6,40%
IV 5,10% 5,10%
IVa 7,90% 5,10%
V 0 0
Here you can check to which zone the enterprises registered in a particular area of Norway are assigned. The fixed costs to be borne by the employer are at least 26.3% of the employee’s gross salary: – employee employment fee – 14.1%, – pension contributions – min. 2%, – feriepenger – min. 10,2%. Variable costs average 5% on the employee’s gross salary amount: – sick pay, – accident and health insurance, – employee training, – work clothes.

INVOICES IN A NORWEGIAN COMPANY

Business in Norway - invoice Invoices can be issued by Norwegian companies that are registered with Brønnøysundregistrene (brreg.no) and have a company bank account number. The invoice should state the company issuing the invoice and its counterparty. If the document is issued incorrectly, a correction can be made with a kreditnot, or correction invoice. In addition, companies that deal in cash are obliged to keep a cash register and prepare the relevant reports. If the entrepreneur does not use an accounting firm and does the bookkeeping himself, he can use a special invoicing programme, such as the free invoice software FakturaSolid (fakturasolid.no). If the company’s turnover has exceeded the limit of NOK 50 000 in consecutive 12 months, the business must be entered in the VAT register. Businesses that are VAT payers should include the abbreviation MVA on their invoices. If the company’s turnover has not exceeded 50,000 NOK in the following 12 months, the entrepreneur can issue an invoice with a zero VAT rate (VAT 0%).

WHAT CAN BE DONE WHEN A CUSTOMER IS LATE WITH PAYING AN INVOICE?

Non-payment of invoices by contractors is a common cause of lack of liquidity for many companies. When faced with this situation, an entrepreneur can:

– wait for the customer to pay,

– apply for repayment through official channels.

In such situations, it is also possible to seek assistance from the Norwegian Arbitration Council, forliksrådet, which deals with cases involving debts for goods and services. If an entrepreneur wishes to report a case to the forliksrådet, he/she should do so in the municipality where the debtor lives or operates.

The entrepreneur has the option to demand payment of the amount due 14 days after the due date of the invoice. Inkassovarsel is a reminder to pay, which should precede a referral to a debt collection company or a court. The reminder should include a precise deadline for payment of the debt – at least 14 days – and the amount owed. A reminder – purring – may be sent after the specified payment deadline has passed. It is worth remembering that subsequent reminders mean that interest – purrebegyr – may be added to the amount owed for non-payment on time. If sending a purr does not produce results, the entrepreneur can issue a demand for payment – inkassovarsel – and after a further 14 days a final demand for payment – betalingsoppfordring. Only after this is it possible to take the matter to a Norwegian court or a debt collection company (inkasso).

If the entrepreneur intends to wait for the customer to pay, he or she should pay the tax for the invoice in question – otherwise the Norwegian authority will add penal interest to the tax amount.

FINANCIAL CRISIS IN A NORWEGIAN COMPANY

Business in Norway - crisis It is worth remembering that operating a company in Norway, in addition to growth opportunities, brings with it certain risks that every entrepreneur should be prepared for. Regardless of the nature of your business, every company may face a lack of liquidity – knowledge of the possible solutions, combined with an analysis of your company’s individual situation, will allow you to implement the right changes. In Norway, a company’s liabilities to the authorities can be spread into instalments. It is also possible to write off part of the debt or part of the outstanding interest. A request for debt to the authorities can be made when the amount owed exceeds the company’s real financial possibilities. If a company in Norway is struggling financially, the entrepreneur can request a change in the amount of advance income tax. The letter should be properly documented so as to leave no doubt about the company’s financial condition. The Norwegian financial sector also offers an opportunity to overcome the crisis – entrepreneurs may be offered a loan or credit to help boost their company’s budget. Careful thought should be given to the decision to use financing, as such liabilities must be repaid regularly and on time. Every entrepreneur should bear in mind the necessity to acquire new customers and strengthen the company’s position on the Norwegian market, as financial liquidity is the basis for proper operation of the business. For this reason, it may be appropriate to hire a specialist to ensure an effective marketing strategy that takes into account the nature of the company and the market in which it operates. Enterprises with employees can benefit from permittering. The Norwegian Labour and Welfare Administration – NAV (nav.no) takes over the payment of wages for a specified period (maximum 49 weeks) – after 30 weeks, the employer pays for five consecutive days and NAV again for another 19 weeks. To apply for permitting, the owner must justify the company’s financial problems to the office, and the employee should meet certain conditions: – he or she earns at least a minimum gross income (a minimum of 1.5G for the previous calendar year or a minimum of 3G for the last three calendar years – the G rate is a base amount set each year), – is exempt from a minimum of 50% of base working hours, – is listed in the unemployment register (NAV, nav.no), – has a letter of permittering issued by the employer.

WHEN DOES A NORWEGIAN COMPANY BECOME A VAT PAYER?

If the company’s annual turnover exceeds NOK 50,000, the entrepreneur is obliged to register as a VAT payer and pay the tax due at the specified rates. The limit of NOK 50 000 is counted from the start of invoicing for the following 12 months. After this time, the limit resets to zero. Business in Norway - VAT VAT payers should include the abbreviation MVA on their invoices indicating that the relevant tax rate is added to the goods and services. VAT is accounted for in the form of a tax return (submitted via altinn.no), in which all costs and revenues of the business must be reported. Imports of goods are also accounted for in the tax return – the obligation to account for VAT rests with the entrepreneur.

INCOME TAX IN NORWAY

Business in Norway - thresholds Income tax in Norway is 22% on company profits. This is only a base amount, as each year tax thresholds are set beyond which the tax rate increases accordingly.

In Norway, the amount of income tax payable increases together with the company's income.

After registering the business and then at the beginning of each year, the entrepreneur is required to declare the expected profit of the company. On the basis of the declaration of anticipated profit, the Norwegian Tax Authority calculates the amount of advance income tax. Advance income tax payments are paid in four instalments on prescribed dates. Business in Norway - deadlines

Feriepenger

The Norwegian Holiday Act guarantees the right to holiday and holiday pay. Holiday leave – feriepenger – is granted to every employee and holiday pay is exempt from taxation.

Norwegian legislation regulates the amount of holiday pay. The amount of the benefit depends on the amount of the employee’s salary – base and commission – from the previous year, and sickness and carer’s allowance is also included in the salary.

During the period of benefits, holiday pay is accrued:

– sickness benefit – for the first 48 days,

– parental benefit – for the first 12 or 15 weeks.

Depending on who paid the employee’s accrued benefit during the period, holiday pay is paid by the employer or the Social Insurance Office – Folketrygden.

Feriepenger is a minimum of 10.2% of the employee's earned wage base. Persons over 60 years of age are entitled to a minimum of 12.5% of the earned wage base.

The benefit should be paid on the last day before the employee’s holiday. If the holiday is not taken in full, the payment of feriepenger is also partial – the benefit is only paid when the holiday is taken. Holiday leave can be carried over to the following year – this applies to a maximum of 12 working days.

Feriepenger cannot be included in an employee's regular salary.

Norwegian employees are entitled to a minimum of 25 working days of annual leave – an additional week of leave is added for those over 60 years of age. It is worth remembering that Saturdays are treated as working days in Norway.

An employee has the right to opt out of taking annual leave if the amount of wages lost during the leave would be greater than the amount of the leave benefit.

Holidays should be scheduled at least two months in advance. The employer shall determine the date of the holiday in consultation with the employee, but it is for the employer to make the final decision on the matter.

RETIREMENT IN NORWAY

Business in Norway - pension The right to pension benefits is provided by part of the pension from the Norwegian social security system – folketrygden. For this, you must have been a member of the Norwegian social security system for at least three years. The employer’s pension is the benefit part of the mandatory pension schemes for most Norwegian employees. Employers can also sign an agreement with AFP – avtalefestet pensjon – so that employees are entitled to an additional pension.

During the period in which the pension benefit is drawn, it is possible to work regardless of the amount earned.

The amount of the benefit depends on the number of years worked, the savings you have and how long you have lived in the country. The retirement age is 67.

The rules relating to the award of pensions are based on date of birth:

– for persons born before 1954, the old rules for pension calculation are applied,

– for persons born between 1954 and 1962 a combination of the old and new pension calculation rules is used,

– for persons born after 1962, the new pension calculation rules are applied.

According to the social agreements between Poland and Norway, upon returning home, persons who are entitled to a Norwegian benefit may continue to receive their pension. To do so, an appropriate application must be submitted to the Social Insurance Institution – ZUS.

If certain conditions are fulfilled, a Norwegian pension may also be drawn while staying abroad:

– stay abroad for up to 12 months: the pensioner remains a member of folketrygden provided he/she has stayed in Norway for at least 6 months in each benefit year,

– stay abroad for more than 12 months: the pensioner ceases to be a member of the folketrygden.