Taxation of multinational companies and companies with a digital revenue platform
06 November 2018
Physical presence is a fundamental principle of international taxation. If a company sells goods and/or services to consumers in Norway but does not have a physical presence in the country, Norway will not have the taxation rights to the income generated from these sales. This is because it is assumed that the creation of wealth has not taken place in Norway. Digitalization challenges this form of taxation system, precisely because a company can serve a market without a physical presence.
During consideration of Document 8:69 S (2017-2018), the Storting adopted a recommendation concerning the taxation of multinational companies with little physical presence.
The Department points out that Norway actively participates in the OECDʼs work through a task force, specifically formed to address tax-related challenges associated with the digitalized economy. EU developments are also closely monitored. The Norwegian Government has emphasized that its primary goal is to pursue international rules in this area and has announced that an update on this work and any subsequent actions can be expected in the fall of 2019. In this connection, it has been announced that possible temporary solutions for taxation of multinational companies with digital revenue platforms will be assessed.
In addition, the Government will distribute a consultation paper concerning withholding tax in relation to the payment of interests and royalties in 2018, and submit a bill in 2019.