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Global transfer pricing guide

Transfer pricing - Norway

30 Oct 2023

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Introduction to transfer pricing in Norway
Transfer pricing rules
  • Norway’s transfer pricing (TP) legislation is stated in the Norwegian tax act § 13-1.
  • The TP rules apply to Norwegian taxpayers, including Norwegian branches of foreign companies and there is a self-assessment regime, i.e., the burden of proof is on the taxpayer to confirm its TP meets the standard.
OECD guidance
  • According to the Norwegian tax act the OECD guidelines must be taken into account. 
Transfer pricing methods
  • The tax rules are based on an arm's length principle, i.e., transactions must be priced as if the transaction had taken place between independent parties. The comparison with price between independent parties must take place on an objective basis. 
Self-assessment
  • Norway has a self-assessment regime, where the burden of proof is on the taxpayer to ensure that TP regulations are adhered to.
Transfer pricing documentation
Preparation of transfer pricing documentation
  • In Norway a transfer pricing report on the nature and scope of transactions and balances with related companies must be submitted as an attachment to the corporate income tax return if;
    • Controlled transactions with a total value of NOK 10 000 000 or more a year or
    • Balance with a total value of NOK 25 000 000 or more at the year end.
  • Transfer pricing documentation must be presented within 45 days from the tax authority’s request. 
  • There are exceptions from the obligation to provide documentation for companies that, together with related parties, have fewer than 250 employees, and either have:
    • a total sales income that does not exceed NOK 400 million, or
    • a total balance sheet amount that does not exceed NOK 350 million
  • There are in addition to the above transfer pricing report three types of TP documentation: (i) local file, (ii) master file and (iii) CbCR.
Some risk factors for challenge
  • Changes in TP model or business restructuring may be challenged by the tax authorities. Hence, should be well thought through, reviewed, and supported by written assessment/documentation. 
  • Persistent losses in any entity.
  • Transactions with low tax jurisdictions.
Penalties
  • The tax authorities can determine the income by discretion if the taxpayer's wealth or income has been reduced due to a direct or indirect community of interest with another person or company. In the assessment, assets or income must be determined as if community of interest had not existed. 
  • The tax authority may impose penalty tax with up to 60%. 
  • The tax authority may impose a fine with up to NOK 62 150 (2023 rate) if transfer pricing report is not submitted or if there are obvious errors in the submitted transfer pricing report. 

For further information on transfer pricing in Norway please contact:

Lars Pløen
T  +47 982 07 209
E lars.ploen@no.gt.com

Lene Halvorsen
T +47 936 13 905
E lene.halvorsen@no.gt.com

 

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