How to Set up Subsidiaries in Norway

Read the step-by-step guide on setting up subsidiaries in Norway, simplifying the process for your international expansion. This comprehensive article provides valuable insights and practical tips, from legal requirements to strategic considerations.

Are you dreaming of expanding your business horizons and tapping into the thriving Nordic market? Look no further than Norway, a land of breathtaking landscapes, cutting-edge innovation, and lucrative opportunities. Setting up a subsidiary in this business-friendly nation can be the game-changing move your company needs.

This article is a comprehensive guide to help you navigate establishing subsidiaries in Norway. We will outline the key considerations, legal requirements, and procedural steps involved, ensuring you approach this endeavour confidently and clearly.

Benefits of Setting up A Subsidiary in Norway  

Setting up a subsidiary in Norway can offer several benefits, including tax incentives and a favourable business environment. Here are some of the many benefits

Business-friendly Environment: Norway is known for its stable political climate, strong rule of law, and transparent business regulations, making it an attractive destination for foreign investment.

Tax Incentives: Norway offers various tax incentives to encourage foreign businesses to establish subsidiaries. These include reduced corporate tax rates, research and development tax credits, and exemptions on dividends received from foreign subsidiaries.

Skilled Workforce: Norway has a highly skilled and educated workforce with a strong focus on innovation and technological advancements. Access to such talent can enhance your subsidiary’s operations and productivity.

Market Access: By setting up a subsidiary in Norway, you gain access to the Norwegian market and the more comprehensive European Economic Area (EEA). This allows you to tap into a consumer base of over 500 million people.

Robust Infrastructure: Norway boasts a well-developed infrastructure, including modern transportation networks, efficient logistics systems, and reliable digital connectivity, enabling smooth business operations.

Factors to Consider Before Setting up A Norway Subsidiary

Setting up a Norway subsidiary can be a significant step for your business, requiring careful consideration and planning. This guide will provide a professional and simple-to-read overview of the process.

Evaluate the Business Environment: 

Before setting up a Norway subsidiary, thoroughly assess the business environment in Norway. Consider market demand, competition, economic stability, and legal and regulatory frameworks. Conduct thorough research to ensure Norway aligns with your business objectives and growth strategy.

Determine the Location:

Norway has different regions and cities, each with unique characteristics and advantages. Research the various locations to identify the most suitable one for your subsidiary. Consulting with local professionals or agencies can provide valuable insights into the regional dynamics, costs, regulations, and micro-cultures. Their expertise can help you decide on the optimal location for your business.

Language Considerations: 

The official language in Norway is Norwegian, spoken by approximately 95% of the population. However, English proficiency is high, with about 90% of Norwegians speaking English. If you or your team members do not speak Norwegian, hiring a translator or employing individuals fluent in Norwegian and English is advisable. Having bilingual employees will facilitate effective communication with clients and stakeholders, enhancing your business prospects in Norway.

Choose the Subsidiary Structure: 

The most common form of a Norway subsidiary is a private limited liability company called Aksjeselskap (AS). This structure offers limited liability protection to shareholders and is relatively straightforward to establish. To set up an AS, you must fulfil legal requirements, including having a minimum share capital of NOK 30,000 (as of the knowledge cut-off date). Consult with legal professionals or business consultants specializing in Norwegian corporate law to guide you through the incorporation process.

Incorporation Process: 

To establish a Norway subsidiary, you need to follow specific steps, including:

Choose a company name

The first step to establish a Norway subsidiary is to choose a company name. When choosing a company name for your Norway subsidiary, it’s essential to adhere to Norwegian naming conventions. The name should be unique and distinguishable from existing businesses to avoid confusion. Conduct thorough research to ensure that another company does not already registered your chosen name in Norway.

Once you have selected a suitable name, you can establish your subsidiary in Norway. It is recommended that you consult with a local attorney or a business registration service to ensure that you meet all the legal requirements and documentation needed for the company name registration process. The chosen name will play a significant role in establishing your brand presence in the Norwegian market, so it is crucial to choose wisely.

Prepare the Necessary Incorporation Documents 

You’ll need to prepare the necessary incorporating documents to establish a Norway subsidiary. These typically include articles of association, which outline the company’s purpose and internal regulations. A share capital deposit certificate is also required, indicating the initial capital deposited in a Norwegian bank. You’ll also need to appoint board members and managing directors to oversee the subsidiary’s operations.

Submit Documents

Once the incorporation documents are ready, you must submit them to the Norwegian Register of Business Enterprises (Brønnøysundregistrene). This involves completing the relevant application forms and providing all the required documentation. It is crucial to ensure that the information provided is accurate and up-to-date.

Pay Registration fees

You’ll be required to pay registration fees as part of the registration process. The amount might vary depending on the nature and size of your subsidiary. Additionally, you must comply with any additional statutory requirements imposed by Norwegian law. These may include obtaining licenses or permits relevant to your industry or business activities. It’s essential to thoroughly understand and fulfil all the legal obligations to establish your Norway subsidiary

Your subsidiary will be registered upon approval, and you will receive a registration certificate.

Comply with Regulations and Taxation: 

Familiarize yourself with Norwegian regulations, tax laws, and reporting requirements to ensure compliance. Norway has a well-established legal framework and efficient tax system. Consider consulting with tax advisors to optimize your subsidiary’s tax strategy and navigate the local regulatory landscape.

Deposit your start-up capital at the bank:

To set up a subsidiary in Norway as an AS (Aksjeselskap), the first step is to deposit your start-up capital at a bank. The minimum required capital is NOK 30,000. This amount needs to be deposited in a Norwegian bank account before proceeding with the registration process.

Register with the Register of Business Enterprises:

Next, you must register your subsidiary with the Register of Business Enterprises (Foretaksregisteret). This registration process can be done online or through a paper form. You will need to provide information such as the company’s name, address, purpose, and details of the board members. Once registered, you will receive a registration number.

File for VAT registration:

If your subsidiary is engaged in taxable activities, you are required to register for Value Added Tax (VAT) with the Norwegian Tax Administration. VAT registration is mandatory for companies with an annual turnover exceeding NOK 50,000. You can register online or submit the required forms to the tax office. VAT registration allows you to charge and reclaim VAT on goods and services.

Arrange mandatory occupational pension plans for employees in a pension agency:

As an employer in Norway, you are required to provide occupational pension plans for your employees. You must arrange these plans through a pension agency approved by the Financial Supervisory Authority of Norway (Finanstilsynet). The pension plans must meet specific minimum requirements outlined by the law.

Enrol in mandatory workers’ injury insurance:

Norwegian law mandates that all employers have workers’ injury insurance for their employees. This insurance provides coverage for work-related injuries and occupational diseases. You can enrol in the insurance through a private company authorized by the Norwegian Labour and Welfare Administration (NAV).

If you follow all the steps and adequately submit the documentation, the registration process will take approximately nine working days.

Key Takeaways

Foreign investors can establish subsidiaries in Norway by following these steps:

  • Choose to register a subsidiary as an option to expand their portfolio in the country.
  • Understand that subsidiaries have independent management and legal personality.
  • Typically, subsidiaries are structured as limited liability companies.
  • Subsidiaries can make strategic decisions and bear responsibility for them.
  • Take advantage of tax incentives available to subsidiaries to accelerate their growth in the Norwegian market.
  • The parent company can own shares in the Norwegian subsidiary, while the foreign company owns most of the subsidiary’s capital.
  • Remember that the subsidiary is a separate legal entity from the parent company.
  • Most subsidiaries in Norway are registered as private or public limited liability companies.
  • Decide whether the subsidiary will operate in the same industry as the parent company or choose a different industry based on the board of directors’ marketing strategy.
  • Create a new bookkeeping system to record payments and taxes applicable to the subsidiary.

Establishing subsidiaries in Norway can be strategic for international businesses seeking to expand their operations. With careful planning, compliance with local regulations, and effective market entry strategies, setting up subsidiaries in Norway can offer significant growth opportunities and access to the country’s affluent consumer market.