Rules & regulations

There are many aspects to consider when entering a new market. Tove Rundtom interviewed partner and attorney Bjarte Bogstad of Vogt & Wiig Law Firm to give you an overview of what to think about when entering Norway.

Bjarte Bogstad says that investing in a foreign country for the first time might be like entering into unchartered territory, one leaves one’s native country’s business environment, rules of law and common way of doing things, without entirely knowing if the same set of beliefs and rules are present in the country where one is evaluating an investment. Also, experience probably tells you that regardless of how equal the cultures and countries in question are, there will certainly be differences. The same is also true for Norway as opposed to the other Nordic countries and opposed to the EU, even if Norway is a member of the European Economic Area and therefore is obliged to transpose the European Council regulations word for word as Norwegian secondary legislation (the primary one being the Norwegian constitution) and is also obliged to implement many of the EU directives into Norwegian law. At the same time, this also gives you a framework of what to expect.

Bjarte Bogstad, Partner and Attorney at
Vogt & Wiig Law Firm.

© Picture – Bjarte Bogstad

Q: So what do I really need to know?

A: First of all, Norwegian law acknowledges private property and as a general rule there are no limitations on ownership by foreign nationals or companies. A commercial property or a business can therefore be 100% owned by a foreign national or company alone. Secondly, Norwegian law is based on the principle of freedom of contract; whether it is made orally or it is in writing it is binding. As in other countries, there is also some mandatory legislation limiting this, but they are more predominant when it comes to entering into contracts with consumers. Thirdly, at least in the big picture, you need to be aware of the tax regime and the regulatory environment, so that you can adjust your business plan to serve your purposes.

Q: Do you have any specific examples? For example, within which areas are there limitations on foreign ownership?

A: Foreign ownership is limited, or special rules apply, within areas of natural resources like energy, fisheries and the agricultural sectors.

Q: Do I need to set up a Norwegian corporate entity in Norway to sell goods there? And how does this affect my tax position?

A: Selling goods or services to customers in Norway may in general be performed directly from abroad, or through a Norwegian corporate entity. For Norwegian tax purposes, if business is considered performed in Norway, or it is led from Norway, it will still be subject to taxation here, regardless of the corporate entity having its registered business address abroad. However, a tax treaty might have rules deviating from this.

Q: What is corporate entity is mostly used in Norway, and how much does it cost to set it up?

A: The most often used corporate entity is the private limited company, which may be set up with a minimum capital requirement of NOK 100,000 (around USD17,000). The amount later will form a part of the company’s working capital. Larger companies tend to be formed as public liability companies, which may be set up with a minimum capital requirement of NOK 1,000,000 (around USD170,000). The latter must by law have at least 40% representation of women on the Board of Directors. Companies listed on the Oslo Stock Exchange must be public liability companies.

Q: To what extent is there freedom of contract between employers and employees?

A: Employees in Norway enjoy considerable statutory protection and often have additional protection through collective agreements between the employers and the employees’ organizations. There are compulsory rules related to environment and conditions in the workplace, compensation for overtime work, and limitations as to the possibility to hire people in temporary positions (the general manager may however be contracted for a specified time), to change their scope of work, and to fire workers who do not perform. A dismissal requires “due cause”, but it does not by itself name any examples of such.

Q: Is it different if we bring our own employees from home?

A: The statutory rules and the collective agreements (if applicable) also apply to foreign employees regardless of ownership of the employer. To be noted here is that the EEA agreement provides citizens of the EU/EEA area free access to the Norwegian labor market, while other nationals need to apply for a permit before taking up employment in Norway. There are separate procedures for specially skilled and seasonal workers who are not EU/EEA nationals.

Q: If we want to sell insurance services to the Norwegian public, can we use the license in our country, or do we have to apply for a new license in Norway?

A: Here there are different rules depending on whether your company is situated within or outside the EU/EEA area. In principle, if you are situated within the EU/EEA you may use your license to sell insurance services in Norway. In other cases, you need to apply for a license within the EU/EEA area.

Q: So would you say that Norway has a safe and predictable legal environment?

A: Yes. But like in any other jurisdiction you need to plan ahead together with legal counsel to avoid unpleasant surprises.

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