Investments in real estate in Norway can be carried out through direct acquisition from abroad, direct acquisition from abroad through a local permanent establishment, or indirect acquisition through a local company.
Last modified 7 Oct 2024
Stamp duty is normally payable on the transfer of title of real estate located in Norway whether commercial, residential or industrial at the rate of 2.5% of the sale value of the property. Normal arm’s-length conditions apply to calculating the sale value. The transfer of shares in limited liability companies and partnerships owning real estate is not subject to stamp duty. A transfer of real estate through the merger or de-merger of a limited company is, provided certain conditions are met, also exempt from stamp duty.
A minor registration fee of approximately €60 is payable in order to obtain legal protection for the right of ownership.
The buyer is responsible for paying stamp duty and registration fee.
Last modified 7 Oct 2024
VAT is not payable on the purchase of real estate or on the purchase of shares in a vehicle holding real estate. However, construction work is subject to VAT. Accordingly, if a new property is built in Norway or construction works are carried out in relation to an existing building, the initial sale by the construction company is subject to VAT.
If a new property is built in Norway or construction works are carried out in relation to an existing building, the VAT payable on the purchase can be recovered if the procurements is used in the investor’s VAT liable business (including rental) and the investor is VAT registered in Norway. VAT refund is not possible for input VAT on procurements related to real estate not used in VAT liable business in Norway.
The standard rate of VAT in Norway is 25 percent.
Upon transfer of property where input VAT has been deducted, the property is deemed to having passed to non-deductible use, and (part of) the input VAT deducted must be repaid. This also applies to property sold by a business using the property in VAT-liable business. This adjustment of VAT can be omitted if the party who takes over the property also takes over the adjustment obligation. The buyer must be VAT registered in Norway and must use the property in VAT liable business to be able to take over the adjustment obligation.
When buying shares in a vehicle holding real estate, the transfer of shares does not trigger an obligation to adjust deducted input VAT.
An adjustment obligation also applies if the use of the property changes from (whole or partial) use in a business which is subject to VAT to use in a business not subject to VAT. However, fire or demolition of premises do not result in adjustment.
Last modified 7 Oct 2024
These include the cost of advisors and costs relating to the setting-up of a company or holding company, if relevant. The seller is responsible for the broker’s fee, unless otherwise agreed by the parties.
Last modified 7 Oct 2024
Property tax may be imposed by the municipal council. This will in general be at a rate of between 0.1% and 0.7% of the taxable value, normally calculated somewhat lower than the market value.
The owner of real estate (and associated chattels) located in Norway (whether Norwegian or foreign) is subject to annual net wealth tax on the value of the real estate (and the chattels) at a maximum rate of 1.1%. There is a basic tax-free allowance for wealth under NOK1.7 million per person. Companies are not subject to wealth tax.
Last modified 7 Oct 2024
No costs are payable other than the usual costs relating to the management and maintenance of the real estate.
Last modified 7 Oct 2024
Under Norwegian domestic tax law income from real estate located in Norway is taxable in Norway, regardless of where the landowner is domiciled. The tax rate is 22%. Norway’s right to tax real estate at source is generally not reduced in double-taxation agreements.
For indirect investment through a corporate entity, the net rental income from real estate in Norway is subject to general corporate income tax at the rate of 22%.
Last modified 7 Oct 2024
The basis for calculating the annual taxable income is the gross (rental) income. As a general rule, all expenses connected to the business of the taxpayer are deductible, including financial and operating expenses, such as insurance, maintenance and repairs, heating, consultancy fees, employee costs, service costs and travel expenses. Certain exceptions apply:
Last modified 7 Oct 2024
Income generated by real estate investments is taxable in Norway at a rate of 22% by the vehicle owning the property. If the investment is made directly the transfer of rental income to foreign investors is not subject to withholding tax in Norway.
Dividends from Norwegian limited liability companies to non-resident corporate investors are subject to a withholding tax of 25%, unless the recipient is protected by a tax treaty or is resident in the European Economic Area (EEA – basically the EU plus Norway and Iceland). For corporate investors resident in the EEA, no withholding tax applies, as long as the corporate investor is deemed to have an actual establishment for Norwegian tax purposes and carries on genuine economic activities in the EEA (the substance test). For corporate investors resident outside the EEA, the withholding tax rate is 25%, but this is usually reduced to 15% or less depending on their share in the ownership of the Norwegian company and the relevant tax treaty.
If the investment is made through a general or limited Norwegian partnership (ie without using a Norwegian limited company), the foreign investor will be deemed to be carrying on business in Norway through its share in the partnership. The investor will have a taxable presence in Norway, and thus the real estate income will be taxable at 22%. Foreign investors who are individuals are subject to additional tax at up to 37.84% on distribution of profits from the partnership.
Last modified 7 Oct 2024
No other costs are payable except the usual costs of advisors etc.
Last modified 7 Oct 2024
No other costs are payable except the usual costs of advisors etc.
Last modified 7 Oct 2024
Capital gains from the sale of Norwegian property are subject to tax at 22%. The tax rate may increase for private individuals if a property investment in Norway is considered to be a business activity (normally consisting of at least 500 square metres of business premises or five apartments for rent). This applies both to resident and non-resident sellers. This liability is also applied in Norway’s tax treaties.
Capital gains and losses from sale of a property owned by a Norwegian limited liability company or a partnership may be transferred to a ‘profit and loss account’, meaning that only 20% of the tax balance at year end needs to be included in taxable income (or deductible) annually.
Capital gains from the sale of shares in a Norwegian limited liability company are generally not taxable in Norway if the seller is a limited liability company. This also generally applies to shares in general and limited partnerships. The fact that gains derived from the sale of shares in companies are tax-free in Norway means that most foreign-based real estate investments are carried out through a Norwegian (limited liability) company. If the investor in the Norwegian company is resident in a state where the applicable tax treaty applies the exemption method to income derived from real estate, capital gains from the investment in Norway may, in certain cases, be tax-free.
For individuals who are tax resident in Norway, a capital gain on shares is taxable at 37.84% (Capital gain is multiplied with an adjustment factor of 1.72 and then taxed at 22%).
Last modified 7 Oct 2024
No other costs are payable except the usual costs of advisors etc.
Last modified 7 Oct 2024
How can investment in real estate by an individual/organization/company be set up?
Investments in real estate in Norway can be carried out through direct acquisition from abroad, direct acquisition from abroad through a local permanent establishment, or indirect acquisition through a local company.
Last modified 7 Oct 2024