norway tax: Change in Norway Tax Law about Taxation of Dividends and Capital Gains
Norway tax law states that dividends given away by a Norwegian company are withholding tax exempt, if the dividends are given away to to a Norwegian entity based in the region of European Economic Area, and if it qualifies for the tax exemption. European Economic Area is all countries in the European Union, plus Iceland, Liechtenstein and Norway. It is not necessary whether there is an applicable tax treaty or not. The qualifying condition here is that the Norwegian Ministry of Finance says that the recipient of the dividend payments must have real economic activities in that country. To be more clear, the entity must have its own employees, buildings, income and it must pay taxes in its home country.
Norwegian Ministry of Finance abated this necessity in their last statement. To get an exemption, it is not compulsory for the entity to be taxable in its home country anymore.
This last statement of Norwegian Ministry of Finance will also effect corporations in Norway receiving dividends in another European Economic Area country, or investors collecting capital gains.
Normally the capital gains and dividends received from a company in a low-tax jurisdiction in the European Economic Area are tax exempt only if the company carries out real economic activities. If the company doesn't have an establishment or it doesn't carry out real economic activities, those capital gains and dividends are fully taxable.
According to the new statement of Norway Ministry of Finance, dividends and capital gains from shares will not be ineligible for a tax exemption anymore, for not having employees or an establishment in that country.
Norwegian taxpayers may apply for a reclaim for falsely paid withholding taxes, raising a claim before the end of year 2009.
Read more about Norway Tax