24 June 2013
On 11 April 2013, the Ministry of Finance launched a public consultation on a bill (13/1689 SL BBE/KR) introducing limitations on the deductibility of interest expenses between related parties. Details of thebill are summarized as follows:
|-||Parties are considered related if one party directly or indirectly owns or controls the other party by at least 50% of the capital or voting power. Related parties may be resident in Norway or abroad. Hence, the limitation also applies to the deductibility of interest expenses between two Norwegian companies.|
|-||Qualifying interest expenses in excess of 25% of the taxable income of an entity, subject to certain adjustments, are not deductible for tax purposes.|
|-||Irrespective of whether or not the interest has been deductible for the payer, the recipient of the interest income is taxed according to the normal rules.|
|-||The limitation is calculated separately for each entity in a group situation.|
|-||Disallowed interest deductions may be carried forward for 5 years.|
|-||The limitation applies to limited liability companies and other companies and entities that are non-transparent for tax purposes. In addition, it covers partnerships and CFC ("NOKUS") companies, as well as foreign entities that have a taxable presence in Norway (e.g. a PE). Financialinstitutions are excludedfromitsscope.|
|-||The new rules are proposed to be effective from 2014 but would also apply for interest expenses on loan agreements concluded before 2014.|
The public consultation ends on 24 June 2013.
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