10 May 2017
On 4 May 2016, the Norwegian tax authority (Skatteetaten) issued a ruling on whether dividends paid by a Norwegian company to its Irish holding company would qualify for Norway's participation exemption for dividends paid to EEA/EU countries. In general, for the exemption to apply, real business (substance) requirements must be met and the structure must not be for purely tax reasons.
The holding company was organized in Ireland and held its board meeting twice a year. The board includes four directors, with three living in Ireland. The holding company had no Irish employees, but operated several foreign branches, including branches in the EEA that employed approximately 200 people to provide regional management and marketing services to other group entities.
According to the ruling the holding of the board meetings in Ireland and the operation of the branches in the EEA are sufficient with regard to the substance requirements and the participation exemption can apply. With regard to tax reasons, the ruling notes that there are oblivious tax benefits for the structure, but given the operations, the existence of tax benefits is not sufficient to disqualify the holding company from the exemption.
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