Norway has introduced a new general anti-avoidance rule (GAAR) with effect from 1 January 2020. The new GAAR is provided in section 13-2 of the Tax Act and includes that avoidance (circumvention) exists where:
The overall assessment includes an assessment of:
Based on the above, if it is determined that the GAAR applies, taxation shall take place as if the transaction or series of transactions had been completed in a manner that reflects the economic substance. Where taxation is not feasible on the basis of economic substance, taxation may be effected by analogous application of relevant tax rules that are disadvantageous to the taxpayer or by a restrictive interpretation of relevant tax rules that are beneficial to the taxpayer.
In addition to Capital and Income Tax, the GAAR section (13-2) also includes that it applies to social security contributions, employer's contributions, and finance tax (the additional 5% tax on wages for financial activities). Further, a separate amendment has been made to the VAT Act to provide that the GAAR section (13-2) applies correspondingly for value added tax.
A new section 13-3 is also added, which applies for companies that have a tax position without connection to an asset or liability item, including tax positions such as deficits, even positive balances, and balances in the profit and loss account. When such a company is a party to a reorganization or may change ownership as a result of such reorganization or other transaction, and utilization of the general tax position is likely to be the predominant motive for the transaction, the tax position:
With the new section 13-3, the prior section 14-90 on tax positions and reorganizations is repealed.
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