Norway: Legislation adopted, financial and tax relief relating to coronavirus (COVID-19)
Norway: Legislation adopted, financial and tax relief
The Norwegian Parliament (Stortinget) on 21 March 2020 adopted a package of measures to address employee layoffs and company bankruptcies in response to the coronavirus (COVID-19) pandemic.
The adopted measures are a first response to the economic situation. The government is working on further targeted measures in three phases. In phase one, the government has prioritized immediate action to avoid unnecessary layoffs and bankruptcies in viable companies that face an abrupt reduction in their turnover.
Summary of tax measures
As part of a larger economic package to address the economic effects of COVID-19, Parliament adopted two state-backed loan and guarantee schemes in the total amount of NOK 100 billion (approximately U.S. $10 billion) with a view to securing access to liquidity for Norwegian enterprises. Read about the measures as proposed: TaxNewsFlash
For direct and indirect tax, Parliament adopted measures mainly to deal with immediate liquidity concerns:
- Subject to certain conditions, companies that are in a loss-making position in 2020 will be able to carry back losses for that year against the taxable profits for the two previous years. Relief is allowed for up to NOK 30 million of corporate losses in 2020.
- Payment of the second instalment of advance tax payment for companies, originally due 15 April 2020, is postponed until 1 September 2020.
- Sole proprietorships or traders and certain other business owners required to make the first instalment of advance payment of tax for 2020 on 15 March 2020 have been granted an extension until 1 May 2020.
- Owners of companies in a loss-making position in 2020 can postpone payments of net wealth tax in respect of the value of assets of the companies. Advanced payments of wealth tax can be reduced accordingly. This measure is intended to reduce the need for family-owned businesses and others to distribute dividends to owners to cover the wealth tax.
- The “lower rate” of value added tax (VAT) has been reduced from 12% to 8% for a limited period from 1 April until 31 October 2020.
- Payment of VAT for the first term 2020, originally due 14 April 2020, is postponed until 10 June 2020.
- Payment of social security contribution originally due 15 May 2020 is postponed until 15 August 2020.
Other measures
The number of days employers are required to pay salaries to workers in case of temporary lay-offs have been reduced from 15 to two days. The intention is that this temporary measure will improve employers' liquidity and help avoid massive lay-offs.
In addition, the excise tax on air passengers has been suspended for the period from 1 January 2020 until 31 October 2020.
Although not a COVID-19 measure, businesses that expects significantly lower profits comparing 2020 to previous years may apply for a reduction of advance payment of tax, possibly to nil.
What’s next?
A proposal to reduce the rate of employers' social security contribution by 4 percentage points for a limited period (two months) may be considered by Parliament in the coming week.
In a second phase, the government is expected to work on further targeted measures towards sectors and businesses affected by the virus outbreak. The government is prepared to respond quickly with new measures.
In the event the pandemic causes a more extensive economic impact, the government would be expected to consider broader measures to sustain economic activity as a third phase of measures.
For more information, contact a KPMG tax professional in Norway:
Per Daniel Nyberg | +47 40 63 92 65 | per.daniel.nyberg@kpmg.no
Thor Leegaard | +47 40 63 91 83 | thor.leegaard@kpmg.no
Read a March 2020 report [PDF 712 KB] prepared by the KPMG member firm in Norway
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
