Crowdfunding
You must enter dividends, gains, interest income and wealth from crowdfunding in the tax return. Some types of donations or losses are deductible.
Does this apply to me?
This applies to you if you donate, lend or invest money through crowdfunding platforms and are resident in Norway for tax purposes.
Crowdfunding is a financial model where people, organisations or companies can gain financial support (funding/capital) from a large number of donors (crowd) through an online platform.
Forms of crowdfunding
Donation-based crowdfunding usually starts with someone creating a crowdfunding project. Then donors can donate a voluntary amount. These projects are usually aimed at private individuals or organisations.
Examples of donation-based crowdfunding can be funding to:
- disaster relief after floods or earthquakes
- private individuals who are ill
- hiking trails in a neighbourhood
Spleis and Bidra are examples of Norwegian donation-based platforms.
Rewards-based crowdfunding will, typically, be when a donor donates an amount to a company to finance a new product.
Some companies may offer a discount on the product they want to produce, a special edition of the product or other benefits from donating. The benefit will depend on the donated amount.
Examples of rewards-based platforms are Spleis, Bidra, Kickstarter and IndieGoGo.
Crowdlending means that many private individuals or companies lend money to a project, intermediated through a crowdfunding platform.
A common form of crowdlending in Norway is loans to property projects.
In crowdlending, the company first applies to market the project through a platform. The platform performs risk analyses of the project and the company behind it. Then it sets the interest rate based on the risk analysis. The platform markets the project and the risk analysis, and you may lend money to the project.
When you lend money to the project, you receive ongoing interest income set by the platform. The loan is paid back in full when the project period, or subproject, has ended.
The platform handles the payments between the lender and project, but you have no other responsibility.
Examples of crowdlending platforms are Kameo, Oblinor and Kredd.
A private limited company can raise financing to grow, or invest, by issuing new shares that they themselves value. The company makes a prospectus explaining the share value that the company asks for. Then they offer the shares to potential, new and existing, investors.
The shares are sold through a crowdfunding platform. The company’s prospectus is shared online through the platform, so that it reaches a large number of potential small investors.
This form of financing is beneficial for start-up and growth companies since the requirements are not as strict as when a company sells shares on the Oslo Stock Exchange (Euronext Oslo Børs) or other similar marked places.
Examples of share-based crowdfunding platforms are Folkeinvest and Dealflow.
What you need to do
You must enter dividends, gains, interest income and wealth in the tax return.
You may be entitled to a deduction for donations to some types of organisations, or when you lose money because the loan is defaulted.
Donation-based crowdfunding is considered gifts and is often aimed at private individuals or organisations. You’re usually not entitled to a deduction for such monetary gifts.
However, you may be entitled to a deduction from your taxable income for monetary gifts to certain voluntary organisations and religious and belief-based communities approved by the Tax Administration. To claim a deduction, you must have donated an amount of NOK 500 or more to each organisation.
Through rewards-based crowdfunding, the project can become more expensive and more complex than expected, and there’s a possibility that the product will never be delivered.
When you invest in such projects, you risk losing the money. You’re not entitled to a deduction for the loss.
If the project does not reach its financial goal, you’re often repaid the amount invested.
If you invest through international crowdlending platforms, you must enter the loan to the project as a claim or receivable in your tax return. You must also enter the interest received from the platform.
If the loan is defaulted and the money is lost, you’re entitled to a deduction for the loss.
Shares that you’ve purchased through a crowdfunding platform may generate dividends or gains on the sale of the shares. You must enter dividends or gains as taxable income in your tax return.
You must enter the value of the shares as wealth in your tax return.
If you’ve received other benefits from investing in the company’s shares, you must pay tax on the value of the benefit. You must, for example, pay tax on the value of any discounts you have received.
If you invest through international platforms, you must enter the value of the shares, dividends and gains on sales in your tax return yourself.
Norwegian crowdlending platforms and banks are obligated to report information on loans and interest income, respectively, to the Tax Administration. You as the investor are also responsible for ensuring that the correct information is stated in the tax return and to correct any are errors.