Norway: Withholding tax on dividends; changes to rules | KPMG | GLOBAL
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Norway: Withholding tax on dividends; changes to rules effective 2018

Norway: Withholding tax on dividends; changes to rules

New rules in Norway effective in 2018 concern the documentation requirements and approval processes for obtaining partial relief or a full exemption “at source” for the withholding tax on dividends.


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The changes are not to the tax law, but are new procedural and documentation requirements and regulations that may affect the position of both foreign shareholders and Norwegian companies with foreign shareholders. 

The rule changes will require action from non-resident shareholders that are already benefiting from relief at source, through direct or indirect registration with VPS (the Norwegian central securities depository), and custodians with approval to operate with reduced or zero-rate accounts. Non-VPS shareholders may also be affected. 


Under current Norwegian domestic tax law, non-resident shareholders are generally subject to withholding tax at a rate of 25% on dividends, but the actual tax withholding may be reduced or there may be an exemption from withholding tax under an applicable income tax treaty. Corporate EU / EEA-based shareholders / investors are generally fully exempt from withholding tax on dividends under the domestic participation exemption (although subject to a substance requirement and a comparability criterion).

  • For shares of stock entered in the electronic VPS system, companies distributing dividends are to withhold tax on dividends distributed to shareholders, based on the withholding rate entered in the VPS account by the account operator (when the shareholder is directly registered with VPS). The account operator enters the correct withholding tax rate (to the extent this is known). 
  • Non-resident shareholders may also be registered in VPS indirectly through licensed custodians (those having a license to operate granted by Norway’s financial supervisory authority). Under existing administrative practice, custodians may apply for approval from the central office for foreign tax affairs in order to operate reduced or zero-rated accounts. Custodians generally may only enter foreign shareholders to accounts with less than a rate of 25% of withholding tax after receipt of a successful refund claim made by the shareholder. 
  • For foreign shareholders of non-VPS shares, the dividend-distributing company is generally required to apply the 25% rate of withholding tax, but may apply a lower rate or a full exemption if the distributing company knows the beneficial owner and its tax status. 

Overview of new rules and procedures

In general, if the Norwegian distributing company does not know the identity or tax status of the beneficial dividend recipient, the company must withhold tax at a rate of 25% on dividend distributions.

VPS-registered shares

For shares registered in VPS, the withholding tax is in practice applied based on the withholding rate entered in the VPS account. The new rules require that the account operator (in the case of a direct VPS registration) or custodian (in the case of an indirect VPS registration) must receive and retain certain documentation in order to enter the shareholder / investor to a reduced rate account.

Documentation requirements differ, but non-individual shareholders will be required to provide, among other items, a copy of a decision of a previous withholding tax refund or a pre-approval decision from the Norwegian tax authorities as well as a valid certificate of residence.

The new documentation requirements also apply for shareholders already registered with reduced withholding tax rate accounts. Beginning in 2018, relief from withholding tax at source, thus, will effectively not be available unless the documentation is provided. If a refund decision has not previously been obtained, the shareholder must apply for pre-approval (see below). 

Shares not registered in VPS

Dividend-distributing companies may apply withholding tax at a rate of less than 25% without incurring liability for non-withholding if the dividend-distributing company has received the requisite documentation from a shareholder (the same documentation requirements as for shares registered in VPS). 

KPMG observation

It has been observed by tax professionals in Norway that various market participants are uncertain of the implications of the new rules for shares not entered in VPS. Tax professionals report that they have received “clear signals” from the Norwegian tax authorities that (as under the current rules) a dividend-distributing company may still opt to distribute dividends using a reduced rate of withholding, provided the identity and tax status of the recipient are known (whether or not documentation is obtained). However, the company may be held liable for the withholding tax obligation if the tax treatment is subsequently found to be incorrect. The new rules include a procedure to avoid or mitigate this potential liability, by obtaining the requisite documentation.  

Application for pre-approval

As part of the new system, a non-resident shareholder may apply to the tax authorities for a pre-approval to apply a reduced rate of withholding tax or a full exemption from withholding tax, based on either provisions of an applicable tax treaty or the Norwegian domestic participation exemption. The pre-approval process is similar to the existing refund process. Applications for pre-approval may be filed in 2017. 

New liability regulations

Under existing rules, the dividend-distributing company has been fully liable, regardless of fault, for any incorrect withholding or non-withholding. Under the new rules, failure to apply a correct withholding tax rate does not result in the company’s liability, provided that the incorrect withholding is not caused by negligence at the level of the company or of any of its service providers.

A custodian acting on behalf of a non-resident shareholder will be liable for any incorrect withholding if the error at the level of the distributing company is caused by the actions of the custodian.

Custodians' approval to operate with reduced rate accounts

Custodians / management accounts operators that register non-resident shareholders indirectly in VPS with reduced withholding tax rate accounts must apply for a new approval from the tax authorities because current approvals expire after year-end 2017.

Withholding tax refund claims

If withholding tax relief is not obtained at source, the shareholder may still apply for a tax refund from the tax authorities. The refund claim procedure is generally not affected by the new rules. As discussed above, a successful refund claim may subsequently provide a basis for relief from withholding tax at source. 


For more information, contact a KPMG tax professional in Norway:

Per Daniel Nyberg | +47 4063 9265 |

Thor Leegaard | +47 4063 9183 |

Anders Kristian Ekern | +47 4063 9047 |

Sebastian Mæhlum | +47 9082 2052 | 

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