background image
Treaty between Australia and Norway – details — Orbitax Tax News & Alerts

Details of the newincome tax treaty between Australia and Norway, signed on 8 August 2006, have become available. The treaty was concluded in English language and generally follows the OECD Model Convention. The treaty is awaiting its ratification by the respective governments.
The maximum rates of withholding tax are:

-   15% on dividends, reduced to 5% if the beneficial owner is a company holding directly at least 10% of the voting power of the payer of the dividends or to 0% if more than 80% of the voting power is held, subject to certain conditions;
-   10% on interest, reduced to 0% for interest derived by the respective government from the investment of official reserve assets and financial institutions subject to the treaty. The 10% rate also applies to interest paid as part of an arrangement which involves back-to-back loans;
-   5% on royalties

Deviations from the OECD Model include the following:

-   Art. 5 (Permanent Establishment) deems a permanent establishment to exist after the following activities last for more than 6 months: existence of a building site or construction or installation project, provision of services within a Contracting State, maintenance of substantial equipment, some manufacturing and processing on behalf of an enterprise in the other State;
-   Offshore activities exceeding 30 days in the aggregate in any 12 month period may constitute a PE;
-   taxation of some assignments of rights in respect to which dividends, interest or royalties are paid are specifically excluded from relief available under Arts. 10 (Dividends), 11 (Interest) or 12 (Royalties).
-   treaty includes a comprehensive Non-Discrimination article, which is uncommon for Australian tax treaties

Both states generally provide for the credit method to avoid double taxation.