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New rules and rates for 2016 - Corporate taxation, VAT and personal taxation

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When entering a new year, there are always numerous changes in the tax and VAT legislation. Below, you will find an overview of the different news regarding corporate taxation, VAT and personal taxation applicable from 2016.

Corporate taxation

The government has approved the following key corporate tax amendments:

  • The corporate income tax rate is reduced from 27 % to 25 %.
  • The rule limiting the deductibility of interests paid to associated companies is tightened. Deductions for interest payments to associated companies are limited to 25 per cent of tax earnings before interest, taxes, depreciation and amortizations. This entails a reduction of the previous deduction limit of 30 per cent.
  • The participation exemption method for dividends is excluded to the extent the distributing company is granted a deduction for the distribution. The background for the amendment is to avoid double non-taxation due to different classifications of financial instruments or legal entities in different jurisdictions (hybrid situations).
  • Due to the reduction in the CIT rate, the resource rent tax on income from hydroelectric power production and the surtax on petroleum activity are increased with two percentage points to 33 % and 53 %, respectively. The natural resource tax threshold is increased to 10 MVA with effect from the 2015 tax year.
  • The rules on the taxation of securities’ funds and income from such funds have been amended so that they reflect the composition of securities in the funds to a greater extent.
  • The maximum deductibility basis (cap) under the R&D tax incentive scheme (SkatteFunn) is increased.
  • Transaction costs related to share acquisitions that are not carried out, are not tax deductible.

For more details on the approved amendments, please see our article here.

VAT

The government has approved that following changes related to VAT:

  • The reduced VAT rate of 8 % increased to 10 %
    From 1 January 2016 the reduced VAT rate of 8 % was increased to 10 %. The 10 % rate applies for services within passenger transport, accommodation, entrance to museums, cinema and large sports events.
  • VAT exemption for electronic news services
    As from 1 March 2016, the supply of electronic news services are VAT zero-rated. Supply of newspapers on paper has been zero-rated for a number of years, while the supply of electronic news services has been subject to 25 % VAT.

The zero-rating comprise all media that mainly contain news and current affairs, regardless of the platform used to distribute the news. I.e. news published on computers, mobile phones, tablets, radio and television will be comprised by the exemption.

For further details, please see our article on the exemption for electronic news services.

Personal taxation

The government has approved the following key personal tax amendments:

  • Tax rate for net income is 25 %
  • Brackett tax replaces the surtax and is applicable at the following thresholds:

    Threshold                          Rate
    Kr 159.800 - 224.9000      0,44%
    Kr 224.900 - 565.400        1,7 %
    Kr 565.400 – 909.500       10,7 %
    Kr 909.500 -                      13,7 %
    Marginal tax rate 2016 for salary amounts to 46,9 % (compared to 47,2 % in 2015).
  • Tax rate for wealth taxation is 0,85 % on net wealth exceeding 1 400 000 NOK
  • Assessment value for wealth tax purposes on second housing and business premises is 80 % of the tax base
  • For 2016 there are minor adjustments in our ordinary deductions (for example the minimum deduction, personal deduction, travel deduction, special deduction for single provider and home savings for young people)
  • Mileage allowance from employer on business related trips is free of tax as follows:
    - 3,80 NOK per kilometer until 10 000 kilometers
    - 3,45 NOK after 10 000 kilometers
    Note that there is a difference between the tax free thresholds listed above and the rates in governmental regulation
  • Dividends and gains on shares are taxed at a rate of 25 %, however the basis for taxation must be multiplied with upward adjustment factor of 1,15
  • Loan from a company to personal shareholder is considered fiscally as dividend (effective 7 October 2015)

The authors of this article are: Kristine Braaten (personal taxation), Mats Hestad (corporate taxation), Cecilie Beck Landet (corporate taxation) and Synne Hangeland (VAT). 

Please feel free to contact us should you have any questions regarding the above changes. 

Ståle Wangen

Ståle Wangen

Jeg heter Ståle Wangen og jobber som advokat i Advokatfirmaet PwC. Jeg leder PwC Norges avdeling for internasjonal skatt og jobber til daglig med å bistå norske og utenlandske virksomheter med skatteplanlegging, strukturering av kjøp og salg av virksomheter, internprising og andre spørsmål knyttet til bedriftsbeskatning i Norge og utlandet. Jeg har mer enn 20 års erfaring med skatterådgivning.

Skatteverdenen blir stadig mer internasjonal og kompleks. Ved kjøp og salg av varer og tjenester utenfor Norges grenser må norske virksomheter håndtere skatteregler både i utlandet og i Norge. PwC har kontorer i de fleste land og vi har et unikt nettverk av skatterådgivere som kan bistå med spesialkompetanse på de fleste områder. Jeg håper mine innspill kan gi deg en alternativ innfallsvinkel til ulike temaer enn hva tradisjonelle nyhetsbrev gir.

Ta gjerne kontakt dersom du har spørsmål, kommentarer eller innspill.

My name is Ståle Wangen and I work as a partner and lawyer in PwC Tax and Legal Services in Oslo. I am head of PwC Norway’s international taxation services, and I have more than 20 years of experience assisting Norwegian and foreign businesses with tax planning, cross border restructuring, mergers and acquisitions (M&A), transfer pricing and other issues related to corporate taxation

Tax world is becoming more international and complex. Norwegian companies must increasingly handle tax rules abroad. PwC has offices almost all over the world and we have a unique network of tax advisors who can assist with expertise in most areas.

Please feel free to contact me if you have any questions, comments or input.

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