The Norwegian Security Act from 2008 (LOV-2008-06-01-24) has an FDI-regime in chapter 10 which encompasses all sectors and applies to both EU and non-EU investors who directly or indirectly acquire ownership or control of (currently) at least one- third (qualified part) of the share capital, equity or voting rights of a company. It may be applied, in whole or in part, to undertakings that (i) handle classified information, (ii) have control of information, information systems, assets or infrastructure that are vital to essential national functions, or (iii) carry out activities that are vital to essential national functions.
As a starting point, the Security Act only applies to investments in companies that have been brought within the scope of the Security Act by means of an individual decision addressed to the company. Nonetheless, the Security Act contains a safety valve which may be used irrespective of whether a company has been brought within the scope of the Security Act. If an acquisition of an undertaking covered by the Act poses a not- insignificant risk to national security interests, the Norwegian authorities may intervene and stop the relevant transaction. The purpose of the right to stop acquisitions is to enable the authorities to control the ownership of strategically important businesses.
On 31 March 2023, the Norwegian Government proposed to amend the Security Act in order to ensure increased scrutiny of acquisitions of undertakings relevant to national security interests. These amendments are not yet in force. The main amendment to highlight is to lower the threshold of when acquisitions must be notified to the authorities in cases where the acquirer directly or indirectly collectively acquires 10% of the share capital, shareholding or voting rights in the undertaking (currently one-third), with subsequent thresholds and notification requirements for late acquisitions at one-third, 50%, two-thirds, and 90%.
Last modified 7 Oct 2024
It is possible for a private investor to effect direct investment in real estate in Norway without a permanent establishment (fast driftssted). A private person or a company conducting business in Norway must however have a permanent establishment for investment purposes. A permanent establishment for investment purposes should not be confused with a permanent establishment from a fiscal point of view.
The fee for registration of a branch in the Norwegian Register of Business Enterprises is approximately NOK3,205 for filing on paper. There will also be additional legal costs. It takes approximately six to eight weeks from the date the Norwegian Register of Business Enterprises receives all relevant documents, however depending on the current workload of the Norwegian Register of Business Enterprises.
The branch must file an extract of the accounts relating to the main company and complete an annual tax return. If the branch office conducts business subject to VAT, a form detailing the sales/turnover must be submitted to the tax collection office every two months. If the branch office has a turnover at or exceeding NOK6 million annually, balance sheet assets at or exceeding NOK23 million or average FTE exceeding 10 the financial accounts must be audited by a certified auditor. With effect from 1 May 2023, the turnover threshold is increased to NOK7 million annually and the threshold with respect to the balance sheet amount is increased to NOK 27 million.
Last modified 7 Oct 2024
Indirect investments in Norway can be made through limited liability corporate vehicles or partnerships. The two types of limited liability corporate vehicle relevant here are:
The only type of partnership that offers limited liability to partners under Norwegian law is the limited partnership (kommandittselskap/KS). This requires at least one of the partners to have unlimited liability (often a private limited company) but there is no limit to the number of limited liability partners.
Another type of partnership often used for real estate investment in Norway is the general partnership (ansvarlig selskap/ANS and ansvarlig selskap/DA) which does not offer limited liability to partners. As a general rule, all partners in an ANS have unlimited joint and several liability, while partners in a DA have pro rata liability.
Norwegian law does not recognize a collective investment vehicle as a separate legal entity. A real estate fund must therefore be set up using one of the corporate vehicles mentioned above.
A real estate fund may also be set up as a form of simple joint ownership between the investors, without using a corporate vehicle. By organizing the fund in this way investors can classify their investment as real estate and not shares. For some investors, such as insurance companies, whose investment activities are regulated by statute, this can be a significant advantage.
Last modified 7 Oct 2024
This is a limited liability corporate vehicle similar to the private limited companies recognized in other jurisdictions.
This is a limited liability corporate vehicle similar to the public limited companies recognized in other jurisdictions.
A kommandittselskap/KS is a limited partnership where at least one of the partners has unlimited liability (often a private limited company). There is no limit to the number of partners with limited liability.
An ansvarlig selskap/ANS and an ansvarlig selskap/DA are both general partnerships. All partners in an ANS have unlimited joint and several liability, while partners in a DA have unlimited pro rata liability.
Last modified 7 Oct 2024
NOK30,000
NOK1 million
The minimum contribution for a limited partner (kommandittist) is NOK 20,000 and the minimum contribution for the general partner with unlimited liability (komplementar) is 1/10 of the company’s capital subject to a minimum of NOK 2,223. Thus, the minimum capital required is NOK 22,223.
No minimum contribution is required.
Last modified 7 Oct 2024
The fee for electronic registration in the Norwegian Register of Business Enterprises is approximately NOK 5,784 and the fee for paper registration is NOK 6,940. There are also associated legal fees.
The fee for electronic registration in the Norwegian Register of Business Enterprises is NOK 5,784 and the fee for paper registration is NOK 6,940.
Normally the general partner is a Norwegian private limited company (aksjeselskap/AS), so the cost of incorporation may additionally include the establishment of this company.
There are also associated legal fees.
The fee for electronic registration in the Norwegian Register of Business Enterprises is NOK 2,656 and the fee for paper registration is NOK 3,205. There will also be associated legal fees.
Last modified 7 Oct 2024
The time required to register a company can vary greatly depending on the workload of the Norwegian Register of Business Enterprises. When persons without a Norwegian personal identification number are registered as members of the board the registration takes more time to complete, as such persons must apply for such a number. The information given below is an estimate based on the average time it takes to complete a registration given that the registration documentation is filed electronically. If the registration documentation is done as a paper filing by post (eg in case of an application for a personal identification number) the average processing will be approximately an additional three to five weeks.
Approximately four weeks from the date the Norwegian Register of Business Enterprises receives all the relevant documentation.
It is possible to buy a ready-made company for approximately NOK 50,000. The time required to become operative would then normally be two days (although it will take longer to register the company's new name and new board of directors etc).
Normally one to two days from the date the Norwegian Register of Business Enterprises receives all the relevant documentation.
Approximately four weeks from the date the Norwegian Register of Business Enterprises receives all the relevant documentation.
Approximately four weeks from the date the Norwegian Register of Business Enterprises receives all the relevant documentation.
Last modified 7 Oct 2024
The shareholders’ meeting is the supreme governing body of the company and elects the board of directors. Appointing a managing director is optional. If the company has appointed a managing director, he or she must report to the board of directors at least once every four months. On 1 January 2024, new rules mandating gender balance on the boards of Norwegian private limited companies meeting certain size criteria (operating and financial revenues) or number of employees were introduced. There will be a transitional period during which in-scope companies will be required to achieve compliance.
The company must keep its own accounts and, as a general rule, appoint a certified auditor. Companies with an operating income of less than NOK7 million, a balance sheet amount of less than NOK27 million and less than an average number of 10 full-time employees does not have an obligation to have the annual accounts audited. A decision not to have the annual accounts audited must be adopted by the shareholders' meeting of the company. As a general rule, DLA Piper recommends that real estate companies with foreign investors have the annual accounts audited.
The shareholders' meeting shall deal with and approve the annual accounts, the auditor's report if applicable, as well as a directors' report. The company must also submit all the above-mentioned documents to the Register of Accounts.
If the company conducts business which is subject to Norwegian VAT, it must also be registered in the Norwegian VAT Register. Letting real estate is not normally subject to Norwegian VAT, although voluntary registration has been introduced for those letting business premises for activities that are liable for VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.
The company can distribute its non-restricted equity as dividends to shareholders as long as its equity (including restricted equity) and liquidity, after the distribution, are adequate in terms of the risk and the scope of the company’s business. The company’s board must assess whether this requirement will be fulfilled.
The shareholders’ meeting is the supreme governing body of the company and elects the board of directors. The board of directors appoints a managing director who is responsible for day-to-day management and must report to the board of directors at least every month. Appointing a managing director is not optional. On 1 January 2024, new rules mandating gender balance on the boards of Norwegian public limited companies, to align such rules with the new rules relating to private limited liability companies (however without any criteria relating to size of the company).
The company must keep its own accounts and appoint a certified auditor. It must submit annual accounts, the auditor’s report, as well as the directors' report to the Register of Accounts.
If the company conducts business which is subject to Norwegian VAT, it must also be registered in the Norwegian VAT Register. Letting real estate is normally not subject to Norwegian VAT, although voluntary registration has been introduced for those letting business premises for activities that are liable for VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.
The company can distribute its non-restricted equity as dividends to shareholders as long as its equity (including restricted equity) and liquidity, after the distribution, are adequate in terms of the risk and the scope of the company’s business. The company’s board must assess whether this requirement will be fulfilled.
Limited partnerships have considerable flexibility to determine their own corporate governance through their by-laws. Voting and profit participation rights can be freely allocated.
The unlimited partner (komplementar) (or the board of directors) can appoint one or more general managers. The general manager does not have the same decision-making powers as a general manager in a general partnership. Limited partners (kommandittister) may have certain limited rights of approval in relation to management decisions. Appointing a board of directors is optional. On 1 January 2024, new rules mandating gender balance on the boards of Norwegian limited partnerships (if one is appointed) meeting certain size criteria (operating and financial revenues) or number of employees were introduced. There will be a transitional period during which in-scope companies will be required to achieve compliance.
If the partnership conducts business which is subject to Norwegian VAT, it must also be registered in the Norwegian VAT Register. Letting real estate is not normally subject to Norwegian VAT, although voluntary registration has been introduced for those renting out business premises for activities that are subject to VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.
The partnership has considerable flexibility to agree its own corporate governance through its by-laws. All partners in an ANS are jointly and severally liable for the general partnership’s liabilities, while partners in a DA have pro rata liability. Responsibilities, voting and profit participation rights can all be freely allocated. Appointing a board of directors is optional. On 1 January 2024, new rules mandating gender balance on the boards of Norwegian partnerships (if one is appointed) meeting certain size criteria (operating and financial revenues) or number of employees were introduced. There will be a transitional period during which in-scope companies will be required to achieve compliance.
If the partnership conducts business which is subject to Norwegian VAT, it must also be registered in the Norwegian VAT Register. Letting real estate is not normally subject to Norwegian VAT, although voluntary registration has been introduced for those renting out business premises for activities that are subject to VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.
Last modified 7 Oct 2024
A limited liability company is subject to the Norwegian regulations relating to accounting and auditing. Each financial year (normally the calendar year), the company must complete and submit annual financial reports and tax returns.
If the company conducts business subject to VAT, a form detailing the sales/turnover must also be submitted to the tax collection office every two months.
Annual costs amount to a minimum of approximately NOK 40,000. The costs are likely to be lower if the company has resolved (where that is permissible) not to audit the annual accounts.
A limited liability company is subject to the Norwegian regulations relating to accounting and auditing. Each financial year (normally the calendar year), the company must complete and submit annual financial reports and tax returns.
If the company conducts business subject to VAT, a form detailing the sales/turnover must also be submitted to the tax collection office every two months.
Annual costs amount to a minimum of approximately NOK 50,000.
A limited partnership is subject to the Norwegian regulations relating to accounting and auditing. However, an exception from the obligation to audit applies if the limited partnership’s total sales revenue is less than NOK 6 million, the balance sheet amount is less than NOK 23 million, if the average number of full-time employees is less than 10 and if it has fewer than five partners, and none of the partners is a corporate body. The above-mentioned thresholds shall be based on the annual accounts from the previous financial year.
If the limited partnership conducts business which is subject to VAT, a form detailing the sales/turnover must be submitted to the tax collection office every two months.
Annual costs amount to a minimum of approximately NOK 40,000.
A general partnership is subject to the Norwegian regulations relating to accounting and auditing. However, an exemption from the obligation to audit applies if the partnership’s total sales revenue is less than NOK 6 million, the balance sheet amount is less than NOK 23 million, if the average number of full-time employees is less than 10, and if it has fewer than five partners and none of the partners is a corporate body. The above-mentioned thresholds shall be based on the annual accounts from the previous financial year.
If the limited partnership conducts business subject to VAT, a form detailing the sales/turnover must be submitted to the tax collection office every two months.
Annual costs amount to a minimum of approximately NOK 40,000.
Last modified 7 Oct 2024
Net rental income from real estate located in Norway is subject to general corporate income tax at 22% (2022 rates).
Other income, including that from the sale of assets, interest and income from real estate etc, is taxable as ordinary income at a rate of 22%. Costs connected to this income are tax deductible.
Under the Norwegian tax-exemption model (TEM), corporate shareholders in Norway are not subject to tax on capital gains on the sale of shares and dividends within EEA. Correspondingly, capital losses on shares are not deductible. Dividends are tax-exempt if the shareholder owns more than 90% of the distributing company’s share capital and controls a corresponding share of the voting rights at the shareholders’ meeting. In other cases, 3% of the dividend will be taxed at a rate of 22%.
An investor company has the right to set interest costs – including those connected with (tax-free) investments – off against taxable income. However, Norway has introduced interest deduction limitation rules which generally limits the tax deductions of interest to 25% of the Norwegian company's Tax-EBITDA.
Dividends distributed to non-resident corporate investors are subject to withholding tax at the rate of 25%, unless the recipient is protected by a tax treaty or the holding company is resident in the EEA and fulfils certain other requirements. For corporate investors resident in the EEA, under the TEM no withholding tax applies. The TEM applies only to qualifying entities considered to be the real (beneficial) owner of the dividend paid by the Norwegian company, and that the shareholder has an actual establishment and carries out genuine economic activities in the EEA country. The 3% rule referred to above does not apply to corporate shareholders resident outside Norway without a permanent establishment in Norway.
For corporate investors’ resident outside the EEA, the withholding tax rate is usually reduced to 15% or less depending on the relevant tax treaty between Norway and the investor’s country of residence.
Profit from the sale of shares in a Norwegian limited company is not taxable in Norway as long as the investor is not resident there and the shareholding is not connected to a business carried on by the shareholder in Norway. This applies to both foreign companies and private individuals.
A KS is taxed as a partnership and is therefore not a separate taxable entity. The profit and loss of partnerships, including net rental income from real estate located in Norway, are calculated at the partnership level and the result is allocated to the partners and taxed in their hands. The tax rate is 22%. Non-residents are liable to the same income tax as residents on income derived from a business or participation in Norwegian business activities which is carried on or managed from Norway and on income derived from immovable property located in Norway.
An additional tax is levied on distributions by a limited partnership to personal investors. The tax rate on distributions is 37.84% (the tax rate is 22% but the distribution is multiplied with a factor of 1.72 as of the 2023 tax rates), effectively amounting to an extra tax at 29.5% points on the business’s net rental income. The marginal rate of taxation is therefore 51.5%.
An investor company has the right to set interest costs off against taxable income subject to the same rules as apply to limited liability companies. However, the interest deduction limitation rules may apply.
Gains on investments covered by the TEM are tax-exempt while losses are not tax deductible.
Partnerships are not separate taxable entities. The profit and loss from a partnership, including net rental income from real estate located in Norway, is calculated at the partnership level and the result is allocated to the partners and taxed in their hands. The tax rate is 22%. Non-residents are liable to the same income tax as residents on income derived from a business or participation in Norwegian business activities which is carried on or managed from Norway and on income derived from immovable property located in Norway.
An additional tax is levied on distributions by the limited partnership to personal investors. The tax rate on distributions is 37.84% (the tax rate is 22% but the distribution is multiplied with a factor of 1.72 as of the 2023 tax rates), effectively amounting to an extra tax at 29.5% on the business’s net rental income. The marginal rate of taxation is therefore 51.5%.
An investor company has the right to set interest costs off against taxable income subject to the same rules as apply to limited liability companies. However, the interest deduction limitation rules may apply.
Gains on investments (covered by the TEM) are tax-exempt while losses are not tax deductible.
Last modified 7 Oct 2024
Are foreigners allowed to invest by directly purchasing a commercial real estate asset?
The Norwegian Security Act from 2008 (LOV-2008-06-01-24) has an FDI-regime in chapter 10 which encompasses all sectors and applies to both EU and non-EU investors who directly or indirectly acquire ownership or control of (currently) at least one- third (qualified part) of the share capital, equity or voting rights of a company. It may be applied, in whole or in part, to undertakings that (i) handle classified information, (ii) have control of information, information systems, assets or infrastructure that are vital to essential national functions, or (iii) carry out activities that are vital to essential national functions.
As a starting point, the Security Act only applies to investments in companies that have been brought within the scope of the Security Act by means of an individual decision addressed to the company. Nonetheless, the Security Act contains a safety valve which may be used irrespective of whether a company has been brought within the scope of the Security Act. If an acquisition of an undertaking covered by the Act poses a not- insignificant risk to national security interests, the Norwegian authorities may intervene and stop the relevant transaction. The purpose of the right to stop acquisitions is to enable the authorities to control the ownership of strategically important businesses.
On 31 March 2023, the Norwegian Government proposed to amend the Security Act in order to ensure increased scrutiny of acquisitions of undertakings relevant to national security interests. These amendments are not yet in force. The main amendment to highlight is to lower the threshold of when acquisitions must be notified to the authorities in cases where the acquirer directly or indirectly collectively acquires 10% of the share capital, shareholding or voting rights in the undertaking (currently one-third), with subsequent thresholds and notification requirements for late acquisitions at one-third, 50%, two-thirds, and 90%.
Last modified 7 Oct 2024