COMPANY ACCOUNTING IN NORWAY

COMPANY ACCOUNTING IN NORWAY

Knowledge of the rules and regulations relating to business accounting is a must for Norwegian business owners. Thanks to this knowledge, the company can function efficiently and in accordance with the regulations in force, so entrepreneurs do not have to fear problems with the Norwegian tax office. On this page we have gathered a range of information on how to issue invoices, the laws governing accounting and the deadlines and rates that apply to business owners in Norway.

LAWS REGULATING ACCOUNTING IN NORWAY

Accounting in Norway is regulated by two Acts – Regnskapsloven and Bokføringsloven.

Accounting Acts:

– Regnskapsloven,

– Bokføringsloven.

Norwegian entrepreneurs do not have to use the services of an accountant; they can keep their company’s accounts themselves. However, be aware of the obligation to meet deadlines set by the authorities and ensure the correctness of calculations – failure to meet deadlines or errors in accounts may mean frequent inspections from the Norwegian tax office.

The Act on Auditors, Revisorloven, identifies the companies that are affected by the obligation to have their annual accounts externally audited.

The laws regulating Norwegian accounting include issues related to the profit and loss account, valuation, balance sheet or the obligation for entrepreneurs to file an annual tax return. According to Norwegian regulations, all business transactions must be recorded and company documents must be kept in accordance with current legislation.

Business owners in Norway should submit their tax return by 31 May of the following tax year at the latest. Information about the company’s income (Skattemelding) can be submitted via Altinn – it is on this basis that the office sends a calculation with the amount of tax to be refunded or paid (Skatteoppgjør).

ACCOUNTING ACCOUNTS

Accounting accounts in Norway consist of 4 digits - the membership of an account is indicated by the first digit

The individual accounting accounts are:

– 1000 (Eiendeler): company assets – all fixed assets,

– 2000 (Gjeld og Egenkapital): debt and equity – settlements with suppliers, banks, authorities,

– 3000 (Inntekter): revenue – the company’s income (net amounts from income invoices),

– 4000 (Varekjøp): purchase – breakdown of purchases of materials and goods (domestic, foreign),

– 5000 (Lønnsutgifter): costs related to employees – salaries, allowances, feriepenger,

– 6000 (Annen driftskostnad): operating costs – depreciation, purchase of tools, work clothes and office supplies,

– 7000 (Annen driftskostnad): operating costs – advertising costs, business trips,

– 8000 (Finansinntekter og – kostnader, periodens resultat): financial income and expenses – interest on loans, financial result for the year.

The chart of accounts is used to show the course of economic events in a company. It is important to correctly match the event to the correct account – the annual accounts show the balances of each accounting account.

The standard chart of accounts, NS4102, consists of more than a dozen pages. It is used to show a scheme for qualifying an economic event

After registering the business, the entrepreneur can open a bedriftskonto, i.e. a company bank account, through which all financial transactions relating to the business are carried out.

INVOICING

[Infographic] NORWAY INVOICE:

  • invoice number,
  • company organisational number,
  • date of issue of the invoice,
  • date of payment of the invoice,
  • seller data,
  • buyer details,
  • bank account number,
  • description of the service/goods,
  • amount to be paid].

Revenue invoices are invoices that a company should issue for the sale of goods and services. Revenue invoices are booked in the account for settlement with customers (1500 – Kundefordringer), 25% VAT on sales (2700 – Utgående merverdiavgift, høy sats) and revenue from sales subject to VAT (3000 – Salgsinntekt varer, avgiftspliktig).

It is worth taking care of the correctness of the invoices issued, as the basis for claiming reimbursement from a counterparty is a correctly issued proof of sale.

Entrepreneurs should control the correctness of their invoices and keep their company’s documents in order – this is particularly useful in the event of a backlog from customers or an audit from the government.

COMPANY DOCUMENTATION

When it comes to company documents, it is important to control their correctness and keep them in order – clear documentation is a big advantage in case of an audit from the Norwegian authorities or when the deadline for filing tax returns is approaching.

The entrepreneur is obliged to keep invoices - it is on the basis of these that the company can make deductions for costs incurred.

The obligation to keep company documentation applies to all Norwegian companies. Depending on their type, documents must be kept between 3.5 and 5 years from the date of closure of the accounting year. Exceptions are customs declarations, accounting or credit documentation, which must be kept for 5-15 years.

Company documentation is divided into primary documentation and secondary documentation. Primary records include, but are not limited to, annual returns, cost documents, register of accounts, VAT returns, income documents, HR documents, balance sheets, letters from the auditor, fixed asset specifications and accounts payable specifications – these should be retained for a period of 5 years from the date of closure of the accounting year. Secondary documentation such as contracts, warehouse documentation and correspondence concerning accounting should be kept for 3.5 years after the accounting year is closed.

According to Norwegian regulations, company documentation should be stored in an archive located on the company’s premises or with an external company – the warehouse is obliged to make the documents available in the event of an inspection.

TAXATION

Tax liability applies to all companies and self-employed persons who live and work in Norway. The type and amount of tax depends on a number of factors, such as the nature and type of company or the fact that employees are employed.

In Norway, personal and business income tax is 22% on company profits. Each year, tax thresholds are set that determine the actual amount of tax to be paid – the amount of tax increases with the income of the business.

[Infographic] [TAX THRESHOLDS FOR 2020:

  • first – NOK 180 800 – 254 500 (taxation of the excess is 1.9%),
  • second – NOK 254 500 – NOK 639 750 (taxation of the surplus is 4.2%),
  • third – NOK 639 750 – 999 550 (taxation of surplus is 13.2%),
  • fourth – above 999 550 NOK (taxation of the surplus is 16.2%)].

Income tax is paid in the form of advance payments within set deadlines – exceeding these may lead to penalty interest. The tax office calculates the amount of advance income tax payments on the basis of the amount of anticipated profit (overskudd), which should be declared by the entrepreneur upon registration of the business and then at the beginning of each year. When the actual profit exceeds the amount on the declaration, the company should pay the due amount of tax by 31 May of the following year at the latest.

[Infographics] [INCOME TAX ADVANCES:

  • Sole proprietorship:
  • by 15 March,
  • by 15 May,
  • by 15 September,
  • by 15 November.

AS companies:

  • [by 15 Feb,
  • by 15 April]

Companies whose turnover has exceeded the limit of NOK 50 000 in a consecutive 12-month period should make an entry in the Norwegian VAT register. VAT payers are obliged to pay a certain amount of tax and to submit a tax return within the prescribed deadlines.

[Infographic] [VAT IN NORWAY:

  • 25% standard rate
  • 15% reduced rate
  • 12% low rate]

[Infographic: VAT RETURN FILING DEADLINES:

  • 10 April (for January, February),
  • 10 June (for March, April),
  • 30 June (for May, June),
  • 10 October (for July, August),
  • 10 December (for September, October),
  • 10 February (for November, December)].

TYPES OF COMPANIES IN NORWAY

[Infographic] [ TYPES OF COMPANIES IN NORWAY: 

  • sole proprietorship (ENK – Enkeltpersonforetak),
  • joint stock company (AS – Aksjeselskap, ASA – Allmennaksjeselskap – limited liability company, DA – Delt Ansvar / ANS – Ansvarlig Selskap – general partnership),
  • subsidiary of a foreign company (NUF – Norskregistrert utenlandsk foretak)].

BUSINESS COSTS

Running your own business means that you have to incur costs directly related to your business and prove the reasonableness of these costs. The exact extent and amount of the costs incurred depend on the type of business and the nature of the services provided.

Costs are calculated by means of cost invoices, i.e. invoices issued by suppliers, which are proof of the costs incurred by the company. The entrepreneur should check the correctness of the data on the invoices – in particular the specified amounts: gross amount and VAT, as well as the correctness of the entrepreneur’s data.

[Infographic] [FIXED COSTS:

  • premises rental costs,
  • company telephone/internet subscription,
  • depreciation and car expenses,
  • employing staff].

The amount of fixed costs can be determined in advance, as these are costs incurred on a regular basis, i.e., for example, the cost of renting the premises where the company operates (the premises must be declared as a place of business) or telephone and internet subscriptions, which can only be partially deducted. If the company uses a company car, all expenses related to its use are also an expense, and when it employs employees in addition to the cost represented by the salary, it must pay certain taxes.

[Infographic] [VARIABLE COSTS ARE:

  • materials / goods,
  • tools / equipment,
  • business travel costs, per diems,
  • representation costs,
  • advertising,
  • office supplies,
  • training, licensing and authorisation costs].

The amount of variable costs is difficult to predict in advance, as it changes according to demand – these are costs related to the equipment, materials and office supplies required to generate revenue. Variable costs also include costs related to business travel, i.e. per diem and representation costs, as well as costs for advertising, training (health and safety training) and licensing (industry cards).

AUDIT OBLIGATION

An audit is an external audit of a company's annual reports. The audit of balance sheets and annual reports is carried out by a chartered accountant. The companies to which the audit obligation applies are identified in the Norwegian Act on Auditors - Revisorloven

Under the current legislation, all Norwegian joint stock companies – AS companies – are subject to the audit obligation. A company may be exempted from the audit obligation if it meets certain conditions:

– there is an entry in the founding documents that the auditor is waived,

– the company’s turnover does not exceed NOK 6,000,000,

– the company’s balance sheet total exceeds NOK 23,000,000,

– the company has less than 10 full-time employees.

A sole proprietorship – Enkeltpersonforetak – is subject to an audit obligation when it meets certain conditions:

– the company’s turnover exceeds NOK 5 000 000,

– the company’s balance sheet total is greater than NOK 20,000,000 or the company has more than 20 full-time employees.

A subsidiary of a foreign company – NUF – is subject to an audit obligation if the turnover of the business exceeds NOK 5,000,000.

SOLE PROPRIETORSHIP

Accounting for a sole proprietorship in Norway is relatively straightforward, so it is not necessary to employ an accountant, but the business owner should be familiar with the regulations of the Accounting Act and account for financial transactions correctly.

The company is required to pay advance income tax at the rate set by the Norwegian authority on the basis of the company’s profit declaration (overskudd). The entrepreneur should declare the company’s anticipated profit when registering the business and then at the beginning of each calendar year. Advances for income tax should be posted in the chart of accounts in account 2070 (Forskuddsskatt). The balance of this account at the end of the year must be in line with the advances detailed on the Skattemelding form.

[Infographics] [DEADLINES FOR REPAYMENT OF INCOME TAX DEPOSITS:

  • by 15 March,
  • by 15 May,
  • by 15 September,
  • by 15 November]

Running an ENK company – Enkeltpersonforetak – allows the free use of company funds. Transactions of funds for private purposes (transfers, cash withdrawals) must be recorded in account 2060 (Privatuttak).

Norwegian entrepreneurs must show equity (Egenkapital) in their annual tax return (Appendix RF-1175 Næringsoppgave 1), which must be calculated in account 2050 (Annen egenkapital).

The balances of accounts 2060 (Privatuttak) and 2070 (Forskuddsskatt) after the accounting year has closed should be zero.

A sole proprietorship – Enkeltpersonforetak – is subject to an audit obligation when it meets certain conditions:

– the company’s turnover exceeds NOK 5 000 000,

– the company’s balance sheet total is greater than NOK 20,000,000 or the company has more than 20 full-time employees.

SUBSIDIARY OF A FOREIGN COMPANY

The bookkeeping of a foreign company subsidiary – NUF – is quite complicated, so it is advisable to hire a person to ensure that the company’s accounts are kept correctly. It is necessary to study the law carefully to avoid double taxation problems. Running a NUF also means that you have to comply with the regulations on the import of goods and services. 

Due to the specific nature of the subsidiary’s business, it is often necessary to appoint a tax representative to represent the company in tax matters before the Norwegian authorities on behalf of the company.

Subsidiary owners are not free to use company funds, which is why, as in the case of AS companies, there is no private expense account 2060 (Privatuttak) in the NUFu chart of accounts.

NUF should submit:

– Skattemelding (by 31 May),

– Årsregnskap (by 31 July).

A subsidiary of a foreign company – NUF – is subject to audit if the turnover of the business exceeds NOK 5,000,000.

AS COMPANY

The bookkeeping of Norwegian joint stock companies – AS companies – is complex, so the company’s bookkeeping is usually handled by a professional who ensures compliance with Norwegian regulations.

Shareholders of Norwegian companies are not free to use company funds, which is why there is no private expense account 2060 (Privatuttak) in the chart of accounts. All financial operations should be documented and recorded in the accounting programme

AS shareholders’ remuneration:

– employee remuneration,

– shareholder remuneration (styrehonorar),

– dividend.

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

Companies pay advance income tax at a rate set by the authority based on the company’s profit from the previous year. The tax due must be paid in two instalments in the following tax year:

– by 15 February,

– by 15 April.

AS companies attach Annex RF-1167 Næringsoppgave 2 to their annual tax return.

AS companies are required to submit:

– Aksjonærregisteroppgaven (by 31 January),

– Skattemelding for aksjeselskap (by 31 May),

– Årsregnskap (by 31 July).

According to current Norwegian legislation, all public limited companies – AS companies – are subject to the audit obligation. However, a company may be exempted from the audit obligation if it meets certain conditions:

– there is an entry in the founding documents about the resignation of the auditor,

– the turnover of the company does not exceed NOK 6 000 000,

– the company’s balance sheet total exceeds NOK 23,000,000,

– the company has less than 10 full-time employees.

COMPANY CAR

Owning a company car often proves to be essential for running a business. The costs associated with maintaining a company car are among the basic costs that Norwegian entrepreneurs incur – some of which can be deducted while reducing the tax base.

Årsavgift is the annual fee for owning a company car that Norwegian business owners pay

A car that is to be used as a company car should be registered – either by entering it in the fixed asset register or (if the company uses a private car) completing the Kjørebok form.

[Infographics] [WHEN TO INCLUDE A CAR IN THE FIXED ASSETS RECORD?

  • frequent business trips,
  • car bought on credit/leasing,
  • car of considerable value].

If the entrepreneur decides to include the car in the company’s fixed asset register, he or she should keep receipts and invoices for expenses related to its use.

In the chart of accounts, the costs related to the use of a company car entered in the fixed asset register should be separated into different categories, e.g. fuel (7000 – Drivstoff), repairs (7020 – Vedlikehold). It is also necessary to include the relevant appendices related to vehicle depreciation and expenses in the annual tax return.

[Infographic] [WHEN TO USE KJØREBOK?

  • infrequent business trips,
  • personal car,
  • borrowed car,
  • planned sale of the vehicle].

If an entrepreneur uses a private car for business purposes, he or she should fill in a Kjørebok form in which the details of the car, the date and purpose of the trip and the number of kilometres travelled must be indicated. The number of kilometres calculated by Elektronisk Kjørebok should be multiplied by the appropriate rate.

Running a public limited 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

EMPLOYER OBLIGATIONS

Doing business in Norway often means having to employ staff and incur the associated costs. The employer should also be mindful of the obligations towards employees imposed by Norwegian regulations.

[Infographic] [PROCESS OF EMPLOYMENT IN NORWAY:

  • entry in Aa-registeret,
  • opening of Skattetrekkskonto,
  • signing of contract with employee,
  • reporting the employee to NAV,
  • collecting Skattekort from the employee,
  • completing the employee’s details: bank account number,
  • paying the compulsory pension insurance OTP].

Norwegian law allows for the employment of foreign workers – but they must have a valid personal number and Skattekort. Employees from countries outside the European Economic Area (EEA) should also have a residence permit in Norway.

Fixed costs to be borne by the employer are approximately 26.3% of the employee's gross salary, while variable costs are approximately 5% of the gross salary

Fixed costs:

– employment levy (14.1% on gross salary),

– pension insurance (min. 2% on gross salary),

– feriepenger (min. 10.2% on gross salary).

Variable costs are:

– sickness benefits,

– employee training,

– working clothes, etc.

The employer’s obligations within the scope of job training and HMS, work clothing or industry cards required in some companies (www.byggekort.no, www.renholdskort.no) depend on the scope of activity of the respective company.

It is the duty of every Norwegian employer to pay the employer’s tax – Arbeidsgiveravgift – and the employee’s advance income tax – Forskuddstrekk. The rate of Arbeidsgiveravgift depends on the zone affiliation.

[Infographics] [EMPLOYMENT TAX PAYMENTS MUST BE PAID:

  • by 15 March (for January, February),
  • by 15 May (for March, April),
  • by 15 July (for May, June)
  • by 15 September (for July, August),
  • by 15 November (for September, October),
  • by 15 January (for November, December)].

Companies with employees must take special care to ensure that their documentation is correct and complete. They must remember to inform the office of their employment status and payments by means of the A-melding form at the beginning of each month. By 31 January of the following calendar year, employers are required to provide their employees with a Sammenstillingsoppgave – information on the amount of income and advance income tax payments for the past year. The Timeliste form details the number of hours worked by a particular employee and it is on this basis that the salary for the month is calculated in the case of hourly settlement. The Lønnslipp document, on the other hand, contains the amount of the employee’s gross and net remuneration and advance income tax.

SAFETY AT WORK

The Norwegian Labour Code regulates the employer’s basic obligations towards employees. The employer should ensure safe working conditions by taking the mandatory HMS (occupational health and safety) course and providing employees with industry cards (for cleaning companies and construction companies).

In Norway, persons setting up a business that requires a special permit (list of professions) must have a certificate proving that they have the required qualifications (this includes the medical industry, lawyers, accountants, drivers or massage therapists). Certain types of business, e.g. food, animal or cosmetics companies, should also have a permit from Mattilsynet.

[Infographic] [WHO SHOULD COMPLETE THE HMS COURSE?

The business owner (when employing at least one employee),

the business owner (when subcontracting tasks),

the manager (daglig leder – responsible for the safety and health of the athletes)].

The cost of obtaining the industry cards in force in Norway - byggekort and renholdskort - is entirely borne by the employer.

The industry cards apply to Norwegian companies in the cleaning and construction industries. The badge for employees of construction companies is byggekort. Renholdskort is a badge for employees of authorised cleaning companies. The badges should contain basic information about the employee and the company for which they are currently working.

The only institution that has the right to issue industry cards is EVRY CARD SERVICES AS (www.byggekort.no, www.renholdskort.no). The validity period of the card is two years.

Information to be found on the industry card:

– company name,

– organisational number of the company,

– card holder data (name, date of birth, signature),

– card expiry date,

– details of the issuer (name, address).

ALTINN PORTAL

The Altinn portal is a Norwegian online platform for taxpayers to submit claims, settlements, corrections and appeals. The website can be used to submit documents relating to annual settlement, advance income tax, VAT and social security contributions. A prerequisite for using the platform is the possession of a personal number and MinID codes. When logging in to the website, you must provide a permanent – Fødselsnummer – or temporary – D-nummer – personal number and a five-digit password – the MinID code. The MinID codes needed to use Altinn.no are sent by post to the address provided during registration.

IMPORT AND EXPORT

Norwegian Customs regulates tariffs and the possibility of exemption from customs duties. For detailed information related to current customs tariffs, see the office’s website – www.toll.no.

The exchange of goods between Poland and Norway is possible because Norway is a member of the European Economic Area (EEA). As a result, the import of goods and services by businesses listed in the Norwegian VAT register is exempt from tax – however, entrepreneurs are required to report the import in a tax return.

During inspection at the Norwegian border, you must present a SAD, which is a document containing all information about the goods being transported and an invoice for the purchase of the goods. The SAD should be prepared taking into account the procedures and customs fees currently in force in Norway.

It is mandatory for all traders who are engaged in trade or who have at least five employees to register their business with the Foretaksregisteret - the Business Register.

Exports of goods entirely for consumption abroad are exempt from VAT. So-called interchangeable services delivered electronically, i.e. advertising, legal, consulting services, are also exempt from taxation. Other goods should be taxed.

Export requirements related to the export of goods:

– invoice,

– declaration of goods on export declaration,

– possession of an export certificate for goods (attest for utførsel).

Goods to be exported should be credited to account 3100.

The export of which goods requires permits?

– Medicines (legemiddelverket.no),

– arms (politi.no),

– Food / food supplements (mattilsynet.no),

– alcohols,

– seedlings (mattilsynet.no).

Norwegian VAT on imports is 25% and 15%. Electric cars, ships and their parts, electric windmills, etc. are not taxed.

Goods for import should be booked in account 4001 (purchase of goods from abroad).