Norway: Interest deductibility changes
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Norway: Interest deductibility changes

saastad.jpg

kinden.jpg

Rolf Saastad


Ingrid Anne Kinden

On 8 November, the new Norwegian government presented the final proposal for legislation that would limit the tax deduction of interest on related party debt. The proposed rule is designed to restrict earnings stripping via intercompany debt financing in Norway. The main features of the proposed limit on the deduction of interest on related party debt are as follows:

  • Net interest expense paid to a related party will not be deductible in a year to the extent the expense exceeds 30% of earnings before interest, tax depreciation and amortisation (EBITDA), subject to certain adjustments;

  • The limit will be calculated separately on an entity-by-entity basis, so no consolidated group approach will be available;

  • The threshold for the limitation to apply will be set at NOK 5 million;

  • Net interest expense in excess of the limitation will be available for a 10 year carry-forward, provided the expense falls within the 30% limitation for those years;

  • External debt for which a related party provided security will be considered internal debt and, therefore, will fall within the scope of the rules;

  • Tax losses carried forward and group contributions will not be deductible if the tax base before the limitation for deducting net interest expense is negative or zero. If an interest deduction is disallowed, the taxpayer can thus have a positive tax base and tax payable even though it has tax losses carried forward; and

  • The new legislation will apply from fiscal year 2014.

The proposed legislation is expected to be approved by the parliament without further changes.

Because the measures will apply to both Norwegian and cross-border groups, they may create challenges and require certain groups to undergo reorganisation.

Rolf Saastad (rsaastad@deloitte.no) and Ingrid Anne Kinden (ikinden@deloitte.no)

Deloitte

Tel: +47 23 27 98 36

Website: www.deloitteadvokatfirma.no

more across site & bottom lb ros

More from across our site

Despite the relief, Brazil’s government has also presented a bill which seeks to re-impose a tax burden on companies’ payroll, one local tax specialist told ITR
Jeremy Brown arrives at the firm after a near 16-year career with Deloitte
PwC could elect a woman into the senior leadership position for the first time; in other news, KPMG Australia has extended its CEO’s term
The Senate report into PwC’s scandal is titled ‘The cover up worsens the crime’
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
The firm’s tax business generated a quarter of HLB’s overall revenues in 2023
While successful pillar two implementation will require collaboration across all units, a combination of internal and external tax advice is at the centre of the effort
Binance has also been accused of manipulating foreign exchange rates via currency speculation and rate-fixing
Six individuals should have raised questions over information they received but did not breach professional standards, according to the firm
The partnership of KPMG UK has installed Holt for a second term as CEO and senior partner; in other news, a Baker McKenzie partner has sued the IRS
Gift this article