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Norway: Corporate tax changes in the 2015 national Budget

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Henrik Brødholt

On October 8 2014 the Norwegian government presented the national Budget for 2015. As expected there were no substantial changes regarding corporate income tax, as the government awaits the finalisation of the tax consideration by the Scheel working party. There were, however, changes to partnership taxation and exit taxation, as well as revisions to the R&D credit.

Taxation of partnerships

The national Budget has proposed that partners in Norwegian silent partnerships (IS) and limited partners in limited partnerships (KS) shall be disallowed the ability to use tax losses arising from these partnerships as a means of offsetting taxable profit from other sources. The Budget instead allows for tax losses to be carried forward and offset against future profits, and/or a taxable gain from selling shares, in the same IS or KS. The proposed changes are justified by way of increasing equal treatment of different company types, reducing potential abuse and for general tax rules simplification. The proposed amendments may result in significant changes in the structure, timing and total tax costs for IS and KS companies. These rules are proposed to take effect from 2015.

Exit taxation

According to the existing exit tax rules, assets that are migrated out of Norway are taxable for gains exceeding certain thresholds. This applies only when there has been no change in ownership of the assets. With respect to assets transferred to a taxpayer resident in an EEA country, the payment of the tax assessed may be deferred indefinitely in certain cases. The deferral is subject to an interest charge and security must be provided. However, intangibles and current items are taxable upon exit.

According to the Budget, the deferral rules will now be changed so that any gains will be deferred over seven years calculated on a linear basis (for a gain of 70, 10 will have to be paid in each of the following seven years). This will now also apply for gains from intangibles and current items. The rules are proposed to take effect from 2014.

R&D incentive scheme

The maximum deduction of R&D expenses related to self-development will be revised from NOK 5.5 million ($750,000) to NOK 8 million per firm in 2014, and from NOK 8 to NOK 15 million in 2015. Moreover, the maximum deduction relating to procurement from approved research institutions will be revised up from NOK 11 to NOK 22 million per firm in 2014, and from NOK 22 to NOK 33 million in 2015.

Henrik Brødholt (hbrodholt@deloitte.no)

Deloitte

Tel: +47 984 24 332

Website: www.deloitte.no

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