Taxation of shareholders according to Norwegian law

of shareholders according to Norwegian
Limited liability companies and corresponding companies as shareholders
The tax exemption method, cf. Section 2-38 of the Norwegian Taxation Act, implies that shareholders organised
as limited companies etc. as a rule are exempt from tax on dividends received and capital gains on shares,
mutual fund holdings and financial instruments with shares as the underlying asset. Corresponding losses on the
sale of shares and holdings comprised by the tax exemption method are not tax deductible. With respect to
dividends comprised by the tax exemption method and dividends from businesses assessed as partnerships, 3
per cent of such income is liable to tax.
Natural persons as shareholders
The shareholder model applies to shareholders who are natural persons resident in Norway. This implies that
dividends on shares and gains on the sale of shares in excess of a shielded amount (the shielding deduction) are
taxed at a rate of 27 per cent, with a corresponding deduction right for losses on the sale of shares.
The shielding rules shall ensure that an amount of income corresponding to the normal return on a shareholder's
investment in a company is not taxed as dividends. Each year, a shielding deduction is computed, forming the
basis for the dividend personal shareholders can receive free of tax. The annual shielding deduction is calculated
by multiplying the shielding basis for the share by a shielding interest. The shielding basis represents the amount
the shareholder has paid for the share, with the addition of any unused shielding deduction carried forward from
previous years. For shares acquired prior to 1 January 2006, the acquisition value shall be stipulated in
accordance with transitional rules.
A shielding basis should be calculated individually for each share. Thus, if shares in the same share class owned
by a shareholder are acquired on different dates and at various prices, the shielding deduction may vary. The
Norwegian Directorate of Taxes calculates and announces the interest rate for each fiscal year in January the
year after the fiscal year in question. The shielding interest for the 2014 fiscal year is 0.9 per cent.
Shareholders may require that the shielding deduction be deducted from dividends on the share or gains from the
sale of the share. It is not permissible to deduct unutilised shielding deductions relating to one share from gains
on another share. Unutilised shielding deductions may be carried forward, and shareholders may require that
such deductions be deducted from dividends or gains on the same share in subsequent years. When selling
shares, the FIFO principle applies (First In First Out), whereby the shares that were acquired first, are sold first.
The Register of Shareholders contains information about shares in Norwegian companies, including DNB ASA.
The register is based on information from the Norwegian Central Securities Depository, DNB ASA and the
shareholders themselves. Each year, statements from the register are sent to all Norwegian shareholders to be
used in preparing their tax returns.
Foreign shareholders
Gains/losses on the sale of shares are, as a rule, taxable in the country where the shareholder is resident for tax
As a general rule, dividends received by foreign shareholders are subject to tax in Norway if the dividends are
distributed by a limited company domiciled in Norway (withholding tax).
For shareholders who are natural persons resident outside Norway, withholding tax should be assessed and
deducted. The company distributing the dividends is responsible for making advance tax deductions to cover the
income tax on such dividends at a rate of 25 per cent. However, Norway has entered into tax treaties with a
number of countries, whereby the withholding tax rate is often reduced, normally to 15 per cent. Shareholders
who are tax resident in other EEA countries are entitled to a shielding deduction. If the withholding tax deducted is
higher than the tax payable on dividends after the shielding deduction, the shareholder may reclaim the excess
withholding tax. All such matters must be considered by the Central Office - Foreign Tax Affairs.
Dividends paid to companies that are eligible for exemption according to the tax exemption method and domiliced
in an EEA country will as a rule be exempted from withholding tax in Norway. The tax exemption is conditional on
the company being the real beneficial owner of the share dividends.