Company in Norway

Working as a self-employed person not only presents a number of opportunities, but also presents a number of challenges - and before setting up a business in Norway, it is worth considering whether this is actually a good solution. Many people choose not to become self-employed due to lack of experience and fear of formalities. Having your own business means that you decide yourself on all the important aspects of your work: the direction of your business and its development. It is our decisions that determine the future profit and growth of the company.

The basic choice relates to the legal form of the activity one wishes to engage in - the business should suit the owner's capabilities and situation. The initially narrow scope of the business can be expanded over time. The basic form of business in Norway is the sole proprietorship, or Enkeltpersonforetak (EPF) - no equity capital is required and the cost of setting up a business is minimal. The downside is that there is no separation between the owner's assets and the company's assets - this means that liability for liabilities is virtually unlimited. In addition, businesses in Norway engaged in trade should also register with the Foretaksregisteret - here the stamp duty is NOK 5 570 or NOK 6 797.

Companies whose turnover exceeds NOK 50 000 in a consecutive 12-month period are required to register for VAT. A big plus of running a business in Norway is that dealing with the necessary formalities is relatively easy - communication in English is common (sometimes also in Polish), and the tax and pension system is transparent. As a result, fears of problems related to official matters should not obscure the goal of setting up a business.

When deciding to set up a business in Norway, it is worth paying attention to the formalities that need to be fulfilled - from reporting to the relevant authority, to tax obligations and meeting deadlines, to ensuring the safety of employees.

1. The mere registration of the business with the authorities - carried out electronically through the Altinn.no portal or traditionally on the form provided for this purpose - is only the beginning. In order for the company to function properly and in accordance with the law, it is necessary to take care of all the required formalities.


2. It is good practice to set up a company account - a bedriftskonto - which will allow for all business-related cash flows. In order to set up this type of account, you will need your passport and proof of company registration.


3. Next, entries must be made in the relevant registers - depending on the nature of the business - Merverdiavgiftsregisteret (i.e. VAT register when the company's turnover exceeds NOK 50 000 in the next twelve months), Foretaksregisteret (i.e. commercial register when the company is engaged in trade, has more than five employees or is an AS) and NAV Aa-registeret (i.e. employer register when the company has at least one employee).


4. Another obligation is to submit documents on time - the VAT return (every two months) and the annual tax return (by the end of May of the following year after the tax year).


5. In Norway, entrepreneurs with their own business are obliged to pay taxes - income tax (Forskuddsskatt) and VAT (when the company is a VAT payer), and when they employ employees, they should pay employer tax (Arbeidsgiveravgift) and advance income tax for employees (Forskuddstrekk).


6. Other obligations that must be observed when conducting business in Norway are: tidiness of company documentation (invoices, company account statements), occupational safety (health and safety training - when the company has employees, industry cards - when the profile of the business requires this).


7. It is also important to monitor payments - paying suppliers/vendors on time and receiving payment for goods or services (verifying payments will allow ongoing control of liabilities and receivables).

In Norway, entrepreneurs have the opportunity to benefit from various forms of business co-financing. Such a need arises when the entrepreneur has little or no funds, and it is necessary to purchase necessary equipment or devices, rent premises for the company, etc. In such situations, it is worth checking out possible forms of business co-financing in Norway. In such situations, it is worth checking out possible forms of business co-financing in Norway.

Funding for doing business in Norway may be provided by:

• banks,
• municipalities,
• NAV,
• organisations.

Persons who have been sent on permittering and those who have been dismissed from their job without good reason are not entitled to funding.

Norwegian banks and financial institutions usually opt for co-financing in the form of a lease or loan and look favourably on applications from small and medium-sized enterprises - the key is to justify the need for co-financing: to demonstrate the entrepreneur's actual needs and capabilities. In many situations, it is a good idea to ask for financial support from the municipality where the entrepreneur lives or intends to operate. Supporting entrepreneurship is one of the objectives for which municipalities often have resources.

Another form of support can be funding from the organisations involved - Innovasjon Norge provides support (in the form of a loan, credit or grant) for an amount based on the entrepreneur's objective and financial capacity. The organisation operates in Norway and supports companies, regardless of their type of business. Another option is support from NAV itself - the office supports associations and foundations, social entrepreneurship, various types of projects and training.

When running a business in Norway, it is necessary to register it in certain registers - the obligation to register depends on the type of business, the nature of its activities and the turnover of the company. This is based on registration in the Business Entity Register - Enhetsregister, which should be done by every Norwegian entrepreneur, regardless of the form of business.

The Business Entity Register - Foretaksregister applies to all types of companies and sole proprietorships with more than 5 employees and commercial enterprises. In practice, the badges are intended to improve occupational safety and increase control over operating and emerging companies in Norway.

The identifier should uniquely indicate:

• company name,
• the organisational number (organisasjonsnummer),
• details of the owner of the badge (name, surname, date of birth, sex, signature),
• the period of validity of the badge,
• details of the person issuing the badge (name, surname, address).

Entrepreneurs in Norway who work with subcontractors or have more than five employees or managers who are responsible for the safety of subordinate employees are required to complete an HMS (occupational health and safety) course - the priority is to ensure safety at work.

A Norwegian entrepreneur has to reckon with the costs of running a business - from setting up the company to its day-to-day operation. Many of these depend on the nature of the business, the turnover of the company and the number of employees.

In general, business costs are divided into fixed costs and variable costs. Business costs can vary depending on the nature of the business and the range of services provided by the company in question - it is important to bear in mind the obligation to prove the reasonableness of the costs incurred. Registration with the Register of Business Entities - Enhetsregister, which should be done by every Norwegian entrepreneur, regardless of the form of business - is free of charge. Registration with the Business Entity Register costs approximately kr 2,265 for electronic registration or kr 2,832 for on-site registration at the office. A company whose turnover exceeds NOK 50 000 in a consecutive twelve-month period must be entered in the VAT register.

In Norway, tax is divided into three rates:

• 25% (standard rate),
• 15% (reduced rate: food, beverages),
• 12% (low rate: television, radio, cinema).

Most of the costs depend on the legal form and the specifics of your business in Norway.

Sometimes companies are required to produce special industry cards - Byggekort (net DKK 105.25 per unit) and Renholdskort (net DKK 147.02 per unit) - for construction and cleaning companies.

A sizable cost is the employees employed - here, too, costs can be divided into fixed and variable costs. Construction companies pay a fee to the RVO, which controls such companies - the minimum amount is NOK 250 (depending on the number of workers employed). The owner of the company pays up to 0.03% of the gross amount from the earnings of his or her employees (this only applies to those working directly on the construction site, i.e. not to office and administrative staff).

Companies with more than five employees or working with subcontractors, as well as managers responsible for the safety of their subordinates, must undergo mandatory HMS (Health and Safety at Work) training. The cost of the online course is approximately NOK 1450 net.

When starting a business in Norway, the entrepreneur must be prepared for possible problems - primarily financial problems. In such a situation, it is advisable to analyse the options currently available and implement those that can bring the best results for the company. A considerable convenience for Norwegian entrepreneurs is the possibility to spread liabilities to authorities in instalments - in this way, short-term financial problems can be solved. In order to use such an option, it is necessary to submit properly prepared documents (e.g. by contracting a specialised company) to the relevant office. Sometimes, it is also possible to write off part of the interest or debt - there are grounds for requesting remission when the arrears are significant and exceed the financial capacity of the company.

Norwegian regulations also provide for the possibility of changing the amount of advance income tax in a situation where the actual profit is significantly lower than the one declared earlier - a letter must be submitted containing reliable documentation constituting the basis for changing the amount of advance income tax - e.g. copies of contracts with contractors in cases where the expected income from business activity has changed.

Another way of trying to solve financial problems faced by a company in Norway is to take advantage of the opportunities offered by the Norwegian financial sector - a loan or credit may help, but it is worth analysing the potential consequences of such commitments - borrowed funds must be repaid, so it is not a good solution if financial problems are long-lasting.

A company with employees may benefit from permittering - in this situation, the employer is relieved of the obligation to pay wages, which are paid by NAV. Permittering can last for a maximum of 49 weeks - after 30 weeks of release, the employer pays for five consecutive days and NAV pays for another 19 weeks. Permittering is possible if the reason for the financial difficulties is justified and the employee meets certain conditions. The obvious solution is to focus on acquiring new clients and expanding the cooperation with existing ones - the success of such activities guarantees the company's liquidity. Properly chosen advertising can help - the help of a specialist who will optimally choose a marketing strategy suitable for the type of business is essential for the benefits to be measurable for the invested resources.

Running your own business in Norway entails the possibility of benefiting from Norwegian social benefits, such as sickness and maternity allowance. Where the business owner benefits from the 50% exemption, the company is entitled to earn income, but only within the work to which the issued exemption does not apply (e.g. office work).

Sickness benefit is paid by NAV from the 17th day of exemption and is calculated based on the previous year's base income.

In Norway, maternity benefit is available to all women who have worked for a minimum of six months in the past ten months and whose income has reached a level on which pension contributions have been paid. In addition, the income must be at least half the amount set by NAV - grunnbeløp.

An entrepreneur who is employed by his or her own company acquires the status of an employee and all the rights that go with it - salary, annual leave or compensation for an accident at work. The folketrygden part is compulsory - it ensures that Norwegian residents are entitled to pension benefits. Employer pension is a mandatory pension scheme that applies to most employees. In addition, an employer can enter into an agreement with AFP (avtalefestet pensjon) and its employees are entitled to an additional pension. You are entitled to a pension in Norway if you have been a member of the Norwegian social security system for at least three years. While you are receiving the benefit, you can simultaneously be gainfully employed - regardless of your salary.

The rules for awarding pension benefits differ depending on a person's date of birth:

• for persons born before 1954 → the old rules apply,
• for persons born between 1954 and 1962 → a combination of old and new rules is applied,
• for persons born after 1962 → the new pension calculation rules apply.

When drawing a Norwegian pension, you can stay abroad if certain conditions are met:

• stay abroad for up to 12 months - the pensioner remains a member of folketrygden provided that he or she has been in Norway for at least 6 months in each calendar year,
• stay abroad for more than 12 months - the pensioner ceases to be a member of folketrygden and loses the right to receive the pension (the same applies if, in at least two consecutive years, the stay is longer than 6 months per year).

A sole proprietorship (EPF - Enkeltpersonforetak) usually works well for people who are unable to predict future profits and intend to trade with relatively small funds when running their business in Norway. Setting up a company in Norway is relatively simple and, what's more, can be done electronically (takes about 4-6 days). To set up a company, you must have a permanent personal number and MinID codes that enable you to log on to Altinn.no.

The entrepreneur is required to pay income tax of 22% on the company's profit and social security contributions of 11.4%.

Each year, a tax return must be filed indicating the expected amount of profit, on the basis of which the office calculates the tax, which is paid in four instalments - 15 March, 15 June, 15 September and 15 December. The business must be declared in the VAT register when its turnover exceeds NOK 50 000 in the following 12 months. VAT is settled on the basis of an electronically filed return (www.altinn.no):

• 10 April (for January, February),
• 10 June (for March, April),
• 31 August (for May, June),
• 10 October (for July, August),
• 10 December (for September, October),
• 10 February (for November, December).

If the owner of a sole proprietorship employs employees, he or she is obliged to pay fees - on the employee's employment: 14.1% on gross salary, pension insurance: 2% on gross salary, ferienpenger: 10.2% on gross salary - a total of 26.3% on the amount of gross salary.

NUF (Norskregistrert utenlandsk foretak) is the Norwegian branch of a foreign company - the company is based in Poland, but performs orders in Norway. Establishing a NUF requires registration with Brønnøysundregistrene (www.brreg.no). An application for a Norwegian organisation number must be submitted. The application should include documents concerning the company:

1. articles of incorporation,
2. articles of association,
3. entry in the register (KRS or CEIDG),
4. address data,
5. powers of attorney.

And documents concerning the branch we wish to establish in Norway:

1. name of the branch,
2. scope of activities,
3. personal data of the persons who are to make decisions on legal obligations and data of the board of directors (in the case of companies).

It is also necessary to register with the Register of Business Entities (Enhetsregister), which all Norwegian entrepreneurs must do. Companies with employees should report their stay in the country to the Central Foreign Tax Office (SFU - Sentralskattekontoret for utenlandssaker) and register them with the police.

A NUF is obliged to register for VAT if its turnover exceeds NOK 50 000 in the following twelve months.

It takes up to four weeks to set up an AS company in Norway - in order to register the company, a stamp duty must be paid for entry in the Foretaksregisteret (Register of Companies - www.brreg.no) - this fee is NOK 5 570 or NOK 6 797.

The company is required to have a board of directors (with the obligation to hold meetings at least once a year) and to have full accounts. At least one of the company's shareholders should have a permanent personal number. In the case of an AS company, the owners' assets are separate from those of the company - business liabilities are only collected up to the amount of share capital. In contrast to sole proprietorships, in companies there is a need to document every movement of money.

Shareholders are paid on an employment, dividend or shareholder's remuneration basis. Advances on income tax for AS companies are paid in two instalments:

• 15 February,
• 15 April.

When registering a company in the VAT Register (Merverdiavgiftsregisteret), a form available on Altinn.no must be completed and sent electronically or a paper version must be completed - form BR-1080) and submitted directly to the local tax office (skattekontoret) or Enhetsregisteret.

Norwegian VAT is divided into three groups:

• basic - 25%,
• breduced - 15%,
• blow - 12%.

The reduced rate (15%) applies to food and beverages and the low rate (10%) to transport services (passenger transport) and cinema tickets, among others.

VAT in Norway is settled by means of a tax return submitted via www.altinn.no. The company must show all costs and revenues incurred. When preparing the VAT report, you need to include account statements for the time period in question (accountskrifter), invoices issued by the company (revenue invoices), costs incurred during the period in question (invoices and receipts) and other documents such as the vehicle card or the premises rental agreement.

Invoices issued by a VAT payer company should bear the abbreviation MVA - this means that the appropriate rate of tax is added to each good or service.

In the case of importing goods, VAT payers settle supplies through a tax return - the obligation to charge and settle tax rests with the company concerned.

Income tax must be paid on business conducted in Norway - at 22% on the company's profit. Each year, the authority sets tax thresholds that indicate how the excess income is taxed - once these are exceeded, companies must pay tax at an increased rate. Income tax must be paid in the form of advance payments - the amount is calculated by the office. The timing of payments depends on the form of business.

In the case of sole proprietorships, the payment of income tax follows a pattern:

• declaration of profit (either after the start of the business or at the beginning of the calendar year),
• advance payments of income tax (payable on 15 March, 15 June, 15 September and 15 December),
• filing of a tax return (by 31 May of the following year).

AS companies receive advance income tax payments calculated by the office (based on the company's income from previous years) in January of the following accounting year, which must be paid by the prescribed deadlines.

Income tax - AS company:

• 15 February,
• 15 April.

In Norway, the entrepreneur has the option to calculate the expected amount of profit himself/herself and state it in the tax return before the office does so. The company pays advance income tax and the tax itself is paid from the actual income in the following year.

Invoices can be issued by any company that is registered with Brønnøysundregistrene - the office assigns a Norwegian organisation number and has a company bank account number.

In order for an invoice issued in Norway to be valid, it should contain all the required information that clearly identifies the seller and the buyer of the services or goods. An incorrectly issued invoice can be corrected with a credit note, or credit invoice.

If the company is not a VAT payer, it can issue invoices with zero VAT - VAT 0%. If the company's turnover exceeds NOK 50,000 (in the following twelve months), the business must be registered in the VAT register and the invoices must bear the abbreviation MVA, which means that the appropriate tax rate is added to the goods/services. If the entrepreneur intends to take legal action, he should send inkassovarsel to the debtor. Sending a reminder is obligatory, but in order to be able to take a case to court or a debt collection company, sending a payment demand - inkassovarsel - is necessary. The document must specify the deadline for payment of the debt and the total amount owed.

When demanding payment of a debt, the creditor may send the debtor a reminder - purring - a non-payment fee is added to the amount of the debt - purregebyr, which is regulated by inkassoforskriften).

When demanding payment of the debt, one can send purring and, as a last resort, inkassovarsel or wait 14 days from the date of payment of the invoice and send a summons. Only then does the creditor have the right to take final measures to recover the debt - by means of debt collection (inkasso) or court.

The final step is to send betalingsoppfordring - a demand for payment (within a minimum of 14 days after sending inkassovarsel).

A company can use the assistance of the forliksrådet - the Norwegian Arbitration and Conciliation Board, which handles cases relating to debts for goods and services. The creditor should report the case to the municipality where the debtor lives or operates.

An entrepreneur who intends to employ an employee should:

1. make an entry in the Aa- register et (on the Samordnet registermelding del 1(BR-1010B), mark JA under 3.3 and send to BRØNNØYSUNDREGISTRENE),
2. open a bank account (Skattetrekkskonto) that will be used to secure advance income tax payments for the employee,
3. sign a contract with the employee (in duplicate on paper - this may be in two languages; the rates in the contract may not be less than those set by the NAV office - it is worth monitoring these rates as they change every year),
4. notify the employee to NAV (notification is made on form A-melding, this must be done by Friday of the week following the signing of the contract),
5. pay compulsory pension insurance (OTP - Obligatorisk tjenestepensjon; for each employee with at least 3/4 time employment; this contribution is a minimum of 2% of the salary and is an employer expense - it is not deducted from the employee's paycheck),
6. the employee is obliged to provide a Skattekort (otherwise a 50% advance on income tax may be charged) and a personal and bank account number (Norwegian law does not provide for payment in cash).

When hiring employees, it is worth bearing in mind the costs they generate. Fixed costs total 26.3% on gross pay:
• employment levy (14.1% on gross salary),
• pension insurance (2% on gross pay),
• ferienpenger (10.2% on gross salary - employees up to 60 years of age, 12.5% on gross salary - employees over 60 years of age).

Variable costs are approximately 5% of gross salary, among others:
• sick pay,
• employee training,
• workwear.
Feriepenger (annual leave) is a benefit to which every employee is entitled. Holiday pay and holiday entitlement are provided by the Norwegian Holiday Act.
The amount of the benefit depends on the total salary (base plus commission) earned in the previous year - sickness and care allowance is included in this amount. In Norway, according to the law, holiday pay is 10.2% of earned base (the rate may be higher) - people over 60 are entitled to a minimum of 12.5% of earned base pay.

If the employee is on sickness or maternity benefit, he or she is also entitled to holiday pay - for sickness benefit, the first 48 days; for parental benefit, the first 12 or 15 weeks.