NOKUS (Norwegian-controlled foreign company)

The NOKUS rules stipulate that Norwegian participants in Norwegian-controlled companies and entities resident in low-tax countries shall be taxed for a proportional share of the company's/entity's profit/loss regardless of whether dividends are actually paid out, see Section 2-4 of the Tax Act, cf. Section 10-60 to Section 10-68. The main purpose of the NOKUS rules is to equalize the tax treatment of Norwegian taxpayers who invest in Norway with those who invest in companies in low-tax countries (capital export neutrality).

Participants in a NOKUS

Participants in a NOKUS company can fall into three categories:

• Impersonal participant taxed under ordinary rules, e.g., a limited company

• Personal participant

• Impersonal participant taxed under the special shipping company rules in Section 8-10 of the Tax Act

Setting up participants by tax form

Participants are created in the menu Year-end closing - Information and tax - Participants and selecting the Participants menu item in the left margin. A personal participant is specified by registering the participant's personal identification number in the "Personal identification number" field. An impersonal participant is specified by registering the participant's organization number in the "organization number" field. If a participant is taxed under the special shipping rules in Section 8-10 of the Tax Act, this must be indicated in the menu Year-end - Information and tax - Various information that the company is engaged in shipping activities.

Interest limitation for NOKUS companies

The three categories of participants have different income calculations. For this reason, there is also interest limitation with calculations depending on the category:

• Impersonal participant taxed under ordinary rules

• Personal participant

• Impersonal participant taxed under the shipping company rules in Section 8-10 of the Tax Act

Each of the three categories has its own calculations, where some parts of the numerical material, such as interest, related parties, etc., are the same in all three categories, while other parts differ for those parts of the interest limitation that are affected by differences in income in the income year or previous income years.

Shipping company taxation

Data in shipping company taxation must be registered for the relevant parts of the data, including financial income and financial expenses, which are taxed at the individual participant level.

Participant information

The participant information does not correspond to the participant information in a regular SDF but contains information relevant to NOKUS taxation, varying somewhat depending on the three categories of participants: impersonal, personal, and participants subject to shipping company taxation. There are different tabs with information for each of the participants. If withholding tax on interest, royalties, etc., is paid, this is registered in a separate menu and allocated to the participants.

Wealth

Wealth is registered under the menu item "Year-end - Information and tax - Wealth." Wealth can be registered with the following three mutually exclusive alternatives:

• The market value of listed shares at the end of the income year

• Net wealth from the previous income year

• Estimated sales value at the end of the income year

This value should be the total value for the entire company and should also include shares or units owned by others who are not taxable in Norway. If something other than the market value of listed shares is chosen, information on the calculation of wealth at the end of the income year for use in the next year's wealth determination will also be displayed. This calculation corresponds with the wealth calculation for a limited company to determine the share value for unlisted shares owned by a Norwegian limited company.

Validation of information

As with other taxpayers, there will be continuous validation of information for the client in Period & Year.

Business specification

The business specification is identical to other companies. It is necessary to perform currency conversion of the financial statement figures before these are registered in Period & Year, as Period & Year does not support internal conversion of balance figures from financial statements, etc.

Tax return

The tax return is the same as for other SDFs, but with certain fields specific to NOKUS companies.

Participant reports

In the menu Year-end - Information and tax - Participants, there is a function button to download participant reports in PDF format to send to the company's participants.

Participants' tax returns

After submitting the company return to the Tax Administration, it may happen that the reports are made available as pre-filled information that can be downloaded by the individual participant in Period & Year. The reports are found in the same registration screens as for participants in SDFs in general.