Shares owned in a business – the company’s shares
Companies that own shares in other companies (corporate shareholders) are generally exempt from paying tax on gains and dividends on shares. This is known as the tax exemption method. Correspondingly, losses are not deductible.
Does this apply to me?
This applies to private limited companies that own or have sold shares.
This is shares and dividends
A share is an owner share of a private limited company. This means that when a company buys shares, the company owns a share of another company.
If the company has one share class, each shareholder has the same rights in the company. This includes equal rights to participate and vote in the general meeting, equal rights to receive dividends and equal rights to divest the shares.
The company may create different share classes that grant different rights.
Class A shares usually include the original rights, such as voting rights and the right to receive dividends. Class B shares often entitle the owner to dividends, but no or limited voting rights.
Dividends are a transfer of profits from a private limited company to the shareholders. Dividends can be the payment of money, or the transfer of property or other assets.
The Private Limited Liability Company Act includes provisions on the distribution of dividends, formal and material rules. The formal rules determine who can decide to distribute dividends. The material rules determine how much can be distributed as dividends.
In the Taxation Act, dividends are defined as any distribution of assets from the company to the shareholder.
The input value of the share is what you initially paid for the share. This includes costs.
When purchasing
The input value is what you paid when you purchased. Input value includes any broker fees, the value of any debt taken over, payments in kind and services.
When establishing a private limited company
The input value for the shares is what has been paid. This includes payment of share capital and premiums.
When converting loans to a company
Conversion (exchange) of receivable from a private limited company in the same or other companies is considered a realisation of the receivable. The input value on the received shares is set to the output value of the receivable.
The input value of the shares is the sales value of the receivable at the time of the exchange. If the market value of the receivable is less than NOK 100,000, the input value of the shares is NOK 100,000.
Repayment of paid-up equity
Repayment of paid-up equity and premiums are not considered dividends for tax purposes. Repayment reduces the input value and risk-free return base of the share.
In case of inheritance, gift or gift sale
Some events in the company where you own shares may lead to changes to the input value:
- Mergers and demergers
- Capital reduction through redemption of shares
- Capital reduction in connection with the write-down of the nominal value of shares
- Capital increases in connection with bonus issues
- Capital increases in connection with cash deposits
- Capital increases in connection with contributions in kind
- Splicing of shares
- Splitting of shares
Taxation of dividends and shares
Taxation of dividends within the scope of the tax exemption method
A company that owns shares in another company is generally exempt from paying tax on dividends from shares.
A share of 3 percent of legally distributed dividend is still taxed as ordinary taxable income. The tax rate for general income is 22 percent, which means that dividends in reality are taxed at a rate of 0.66 percent.
If the company owns 90 percent or more of the shares in the company paying the dividend, the companies are considered a group in this regard. Then the rules regarding tax-free dividend between group companies apply, and the dividend is not taxed.
The rules for taxation of dividends also apply to companies within the EEA.
Taxation of dividends outside the scope of the tax exemption method
Dividends from a company domiciled in a low tax country outside the EEA, are taxed as general income with the ordinary tax rate in the year the dividend is decided by the general meeting. The tax exemption method does not apply here.
Furthermore, the company cannot get a risk-free return allowance. The risk-free return allowance is a tax deduction for private individuals and not companies.
Taxation of the sale of shares within the scope of the tax exemption method
A company that owns shares in another company is generally exempt from paying tax on gains from selling shares. Correspondingly, losses are not deductible.
Taxation of the sale of shares outside the scope of the tax exemption method
Gain on the sale of shares in a company domiciled in a low tax country outside the EEA is taxable, and any loss is deductible. The tax exemption method does not apply here.
Gains and losses are included as income or deductions in the year of sale.
Corporate shareholders receive a separate report in PDF format in Altinn (RF-1088S – Corporate). This contains, among other things, the taxable value of shares in Norwegian private limited companies and foreign companies listed on the Oslo Stock Exchange, and that are registered in the Norwegian Tax Administration’s Register of Shareholders. This is for informational purposes only and does not need to be submitted.
Companies must enter their value of shares, even if the company does not pay net wealth tax. Shares owned by a private limited company are not covered by the valuation discount that applies to individual taxpayers. If the company owning the shares have personal shareholders, they’ll receive the valuation discount on their shares.
Taxable value of unlisted shares
- Shares in Norwegian companies (full value)
If the company owns shares in another unlisted company, it’s the (full) value of the shares at the end of the income year, meaning 31 December, that must be used.
This may mean that the values must be determined on a discretionary basis if the taxable values in the owned company have not been determined at this time.
If the shares are owned in a company that’s newly established in the income year, the value of the share’s proportionate share of the private limited company’s total taxable value as at 1 January in the year after the income year is used as a basis in the tax assessment.
Example
Company A, is an unlisted company that owns shares in another unlisted company, company B.
When company A submits the tax return for 2022, company B has not submitted their tax return for the 2022 income year.
Company A must therefore set a discretionary taxable value for their ownership share in Company B.
Company A can submit a corrected tax return with changed taxable values when company B has submitted their tax return.
It’s the same method if company A owns shares in a newly established company.
- Shares in foreign companies (presumed sales value/sales value)
Shares in foreign companies must be entered at presumed sales value as at 1 January in the year after the income year. The share should be valued at the company’s combined taxable value as at 1 January in the income year when the taxpayer so requests and is able to substantiate the company's taxable value.
- Taxable value of listed shares – Norwegian and foreign
The taxable value of shares in listed companies is set to 100 percent of the listed price as at 1 January in the year after income year.
Listed shares are shares that are listed on a Norwegian or foreign stock exchange. If the company is listed on both the Norwegian and a foreign stock exchange, the listed value on the Norwegian exchange must be used.
If the shares are owned in a company that’s newly established in the income year, the value of the shares’ proportionate share of the private limited company’s total taxable value as at 1 January in the year after the income year is used as a basis in the tax assessment.
This is what you must do
The company will receive a separate report in Altinn (RF-1088S – Corporate) in March-April. This contains received dividends, gains/losses and the taxable value of shares listed on the Oslo Stock Exchange, and that are registered in the Tax Administration’s Register of Shareholders.
The Shareholder's tax report only contains information about foreign shares that are registered on the Oslo Stock Exchange. All Norwegian banks and financial institutions must report your holdings of other foreign shares, including wealth, gain and loss and dividend to the Tax Administration.
When you submit the tax return for the company, you must provide information about shares that are not included in the Shareholder's tax report.
Rates and key figures
If share dividends are covered by the exemption method, 3 percent of the dividend or distribution must still be recognised as income from these companies. This amounts to 0.66 percent tax.
If the investments fall outside the scope of the tax exemption method, the company must pay ordinary income tax on the income and can deduct any losses from sale.
Dates and deadlines
The tax return for private limited companies must be submitted electronically by 31 May.
Supporting documents
You do not need to send us any supporting documents, but you must be able to provide them if we ask for them.