Guide

6 Steps to Starting a Company in Norway

Follow the steps below to open a company that is ready to trade in Norway.

Below you will find a checklist with the most important tasks you should complete in order to successfully set up your company in Norway.

Step 1: Choosing the right legal entity and structure

The most common legal entities for entrepreneurs are a private limited company (AS), a sole proprietorship or a general partnership. For foreign entrepreneurs, the AS is the most common legal entity. Besides the type of legal entity, you should also consider which structure is most suited for your company.

Which legal entity?

In a sole proprietorship you are personally liable for the company's actions and liable for its losses. In many cases you will pay more taxes in a sole proprietorship than in a private limited company. A private limited pays the lower corporate income tax. On the other hand, the private limited AS company needs to meet more administrative requirements and is more costly to set up.

Requirements to starting a private limited (AS) company:

  • At least one shareholder
  • Any role in the AS should be fulfilled by someone age 18 or over
  • The company should have a Norwegian physicial address
  • At least 50 % of the board members must reside in Norway or another EEA country.
  • If you are not a citizen of an EU/EEA country, and are planning to run a business in Norway, you need to have a residence permit that will allow you to work here. You can find information about the terms and requirements for resident permit on the Norwegian Directorate of Immigration's (UDI) website.

Requirements to starting a sole proprietorship

  • You plan on conducting commercial activity, not a hobby. If the scope of your activity is limited and your expenses are about the same as your income, it may count in favour of you pursuing a hobby. Profits from hobbies are not taxable income.
  • The sole proprietorship has to be registered at a physicial Norwegian address, not a postbox.
  • If you are not a citizen of an EU-/EEA country, and are planning to run a business in Norway, you need to have a residence permit that will allow you to work here. You can find information about the terms and requirements for resident permit on the Norwegian Directorate of Immigration's (UDI) website.

Choose a structure

The private limited can be set up as a single entity with you as shareholder (or one of the multiple shareholders). Alternatively you could set up a holding structure.

In some cases, it may be appropriate to establish a private limited company which will establish and own one or more other companies. The first company, which is called the 'holding company', is only established in order to own shares in other private limited companies and manage the yields. The other company or companies is a normal operating company and it is this company that is responsible for the commercial activity. There are two particular reasons for establishing a holding company: It helps to spread the risk through carrying on different enterprises in different companies. The gains made on any future sales of enterprises and dividends will be virtually tax-free for the holding company. If a holding company reinvests all the revenues from the operating company, they will pay virtually nothing in tax (taxation of company shareholders). However, if a holding company opts to pay the surplus to their personal shareholders, this will be taxed at the rate of 22%. The advantage of having a holding company, versus owning the shares privately, therefore lies in the opportunity to defer full taxation.

Step 2: Select a trade name

At navnesøk.no, you can find out whether the name you want to use is available as a domain name, enterprise name and trademark in a single search. When you are about to register, we suggest you follow this sequence:

  1. Register the domain name
  2. Register the enterprise name
  3. Register any trademark

Step 3: Getting a D-number or national identity number

In Norway, the public authorities and other organisations require you to have a Norwegian identification number. There are two different types of identity numbers: D number (temporary) and national identity number.

Step 4: Registering a business address

The company must have a Norwegian business address (i.e. a Norwegian physical address which is stated in the format: street/road, house number, postcode and postal town. Postbox addresses will not be accepted). This address can be a private residential address, but also a real office space or a shared office space. The address should obviously somewhat match the purpose of the business. A large industrial company will most likely not be registered at a private residence, but a small consultancy firm can.

Step 5: Registering your business

  1. Found the company by completing and signing the form 'Foundation of a limited company'.
  2. Ask the bank to set up a share capital account. The partners need to deposit the paid-in minimum capital (at least NOK 30,000) in a bank. This procedure can be done online through the bank’s online platform. One of the commonly used banks by private persons and business owners is DNB (dnb.no). The account is blocked until the company has been registered. There are other online banks that offer the same service, such as Sbanken.
  3. Register the company by following the link to register in the Register of Business Enterprises in the notification you received in your Inbox in Altinn. Confirmation that the share capital has been deposited must be enclosed.
  4. Send the notification for signing. You will then receive a notification for signing in your Altinn inbox, which you will use in order to sign the form. The entire board of directors must electronically sign the notification, and the bank must electronically sign the confirmation to verify that the share capital has been paid in. If the company has chosen to have an auditor, the auditor must electronically sign the notification.

You will be notified when the company has been registered via your Inbox in Altinn.

Registering a private limited company costs +/- NOK 5570 (one-off fee from the Register of Business Enterprises).

Taxes in Norway

Find out the amount of taxes you have to pay and which structure/entity works best for you.

How much tax does my company need to pay?

This depends in large part on the amount of profit you will make and which legal structure you choose.

How much tax do I pay in a sole proprietorship?

Income from a sole proprietorship (Enkeltpersonforetak / ENK) is taxed under the personal income tax regime. This income is calculated from your business' revenue minus your business' expenses. This income will generally be taxed somewhere between 33,4-49,6%.

To get an estimate on the amount of tax you will pay over your income in your ENK, use the Tax Calculator.:

  1. Change the website's language to English
  2. Choose the correct tax year, marital status and date of birth
  3. Select "Business" > "Positive personal income from farming, reindeer husbandry, slate quarrying and other business"
  4. Fill out the amount of income you expect to receive from the business (revenue minus expenses).
  5. Calculate your tax

How much tax do I pay in a Private Limited Company AS company?

Both the AS company itself and shareholder/employee will pay taxes.

Taxes the company has to pay

Profits generated by a private limited company are taxed at the rate of 22% in the 2020 income year. This tax is paid in two instalment in the year after the income year. Private limited companies can decide to pay dividends. Dividends to personal shareholders are taxed at the rate of 31.68% in the 2020 income year, while dividends to companies owning shares in another company are virtually tax-free.

Taxes the shareholder has to pay

Secondly, a shareholder can be taxed in one of two ways as regards income from a private limited company:

  • Tax on share dividends
  • Tax on salary from the company

Note: As a shareholder you do NOT have to be also an employee in your company.

You, personally, are the shareholder

If you decide to pay out a dividend to yourself from your AS company, this dividend will be taxed at 31,68%.

Another company is the shareholder (AS holding structure)

This is often the case if you have a personal holding AS that holds the shares in your operating AS. Let's say you have made a profit in the operating AS and you would like to pay out some of the profit to the holding as dividend. This inter-company dividend is for 97 percent exempt from tax. The remaining 3% will be taxed at 22%. This makes this kind of dividend virtually tax-free. This works for both Norwegian and other private limited companies in the EEA.

Dividends received by a Norwegian resident limited company from another Norwegian limited company or a limited company resident in the European Economic Area (EEA) are 97% exempt from tax, with the remaining 3% taxed at the standard normal corporate tax rate of 22%.

You are employed by your AS

When you as a shareholder work for the company and receive a salary, the company must pay employer's National Insurance contributions and make tax deductions for you in the same way as for any other employee. The amount that must be deducted in tax will be stated on your tax deduction card which your company retrieves in Altinn.

You must pay tax on any dividends you receive from the company. The tax must be calculated for the year in which the distribution of the dividend is approved by the general meeting. The tax basis is taxed at the rate of 22% for the 2019 income year.

Refunds of withholding tax on share dividends

As a foreign shareholder, you have limited tax liability to Norway for share dividends you've received from Norwegian companies. As a rule, the Norwegian company must deduct 25 percent withholding tax on share dividends. The tax rate may be lower due to tax treaties or Norwegian tax regulations.

If you're entitled to a lower tax rate than the rate deducted on your dividend payment, you can apply for a refund of too much paid withholding tax. Only shareholders who are final dividend recipients can claim a refund of withholding tax.

Tax calculator

Use the tax calculator of the Norwegian Tax Authorities (Skatteetaten) to find out how much you will have to pay.

Overview of taxes in Norway


AS Holding structure

A common structure is to set up two AS companies: one operational AS company owned by a holding AS.

Why would you set up a holding AS and an operating AS?

  • Accumulated gains/profits in the holding are separated from the operating company in case of a bankrupcy of the operating company.
  • When you sell your operating company, the profit of the sale will flow virtually tax-free to the holding company. Without a holding AS, the entire profit of the sale will be taxed at once.
  • A holding provides an extra layer of security between you personally and the company's activity.
  • Dividends received by a Norwegian resident limited company from another Norwegian limited company or a limited company resident in the European Economic Area (EEA) are basically tax-free. This kind of dividend is 97% exempt from tax, with the remaining 3% taxed at the standard normal corporate tax rate of 22%.
  • Accumulated gains in the holding can be reinvested tax-free into another private limited.

In practice the main difference between owning the shares directly as a individual shareholder or through a private limited company (personal holding), is the timing when dividends and gains are taxed. By owning the shares through a holding company you may decide when you want to pay taxes and over which amount. Another large advantage is that a holding structure allows you to reinvest the untaxed funds back from the holding into any other company. This could give you a larger return in the long run.

In many cases it is advisable to own the shares in your operating company through a holding company. This gives you more flexibility, the opportunity to reinvest your profits and the freedom to decide when and how much you want to pay yourself.

Administration & Tax filing

Get your administration and tax returns in order to run your Norwegian business as smooth as possible.

Below you will find the most common post-incorporation services that you have to consider.

1. Administration and tax

Administration

In Norway, keeping a proper administration in order is not only advisable, but also mandatory. Find the process and required documents and data below.

Administration process

Tax filings and returns in Norway

Your Norwegian company will most likely need to pay taxes in Norway. From VAT to corporate tax and income tax for employees. Find out more how to arrange this in Norway.

(Audited) Annual Accounts

Many companies must publish an annual financial report. If your company is obliged to submit audited annual accounts, you also need a public auditor. Whether or not you are subject to the audit obligation will partly depend on your organisational form and the size of the enterprise.

  • Sole proprietorships (ENK) have an audit obligation when the turnover is over NOK 5 million and the balance sheet contains assets worth over NOK 20 million, or the average number of employees is less than 20 full-time equivalents.
  • Private limited companies (AS) do not usually have a duty to perform an audit. AS companies can 'opt out' of auditing if the operating revenues are smaller than NOK 6 million, and balance sheets assets amount to less than NOK 23 million, and average number of employees is less than 10 full-time equivalents.

2. Permits and licenses

In certain industries, you must have a permit to run your own business. Examples of this are the catering/restaurant and cleaning services sectors.

3. Insurance


Compliance & Legal Contracts

Make sure your company is legally watertight with our contracts and compliancy services.

GDPR Compliance

Norway is a part of the European Economic Area and therefore bound by the GDPR, the General Data Protection Regulation, which resulted in the adoption of a new Privacy Act and other legislative changes to comply with the new data protection rules. Most companies deal with personal data. Therefore you should make sure that you are 100% GDPR compliant. Get in touch to find out more or visit our Services page.

Contracts and other legal work

Depending on your type of business, different types of legal documents are recommended. Some legal documents are recommended for almost every business. Examples are General Terms and Conditions and a Privacy Policy.

Shareholders' agreement

Management agreement

General Terms & Conditions

Extra services to consider

All other services that can help you and your business.

Financing and funding in Norway

Traditionally there are two main types of financing in Norway: investments or bank loans. Both come in many shapes and forms. Find out more about Norwegian funding, from a crowdfunded investment to a traditional bank loan.

Phone number / landline

Website and marketing

A website is the business card of your company. Without traffic and attention means nothing. We can help you to set up a website, webshop or online platform. Additionally we have the expertise to set up marketing channels specifically for the Nordic market.

EORI

If you are a Norwegian company and you are dealing (import/export) with custom authorities in any EU country, you will most likely need an EORI number. You will receive such a number by applying to the customs authorities in the relevant EU country. Check the validity of an EORI number here.

Useful Resources & Tools

The most useful websites and tools when you are starting up in Norway.

The Norwegian government institutes have plenty of useful information on their websites about starting up in Norway. Below are some of the most useful resources and tools:

A good start is to look at the total overview of all the tax rates in Norway. This page is in Norwegian, but can easily be translated into English.

The Norwegian Tax Authorities (Skatteetaten) have made a very extensive online tax calculator. It is standard in Norwegian, but you can change the language to English.

Calculate how much an employee will cost you in Norway.

To find out all about other companies, it can be useful to use the Proff business registry. On this website you can lookup a lot of public data on other AS companies in Norway.