A Guide to Starting a Business in Norway
If you are planning on starting a business in Norway, you’ve come to the right place! In this guide, we will tell you everything there is to know about how to start a business in Norway, what the prerequisites are, what obligations you’d need to meet and what it’s like living in Norway.
With a population of only 5 million people, Norway is ones of the world’s strongest economies, ranking 9th for ease of doing business. Its government is highly focused on providing business-friendly environment to investors and local businesses through enterprise-friendly policies. It is a leading country in the energy, maritime, technology, innovation, and communications industries. When it comes to sustainability, Norway is a global leader with an impressive focus on minimizing its carbon footprint. Its research and development efforts are second to none. All these factors are why Norway has around 35,000 new businesses starting each year.
Therefore, if you are expanding your business overseas, Norway could indeed be a great choice for you. Use this guide to learn how to get started.
How to Register a Company in Norway?
The first step of starting a business in Norway is to register your business. You can do it through their Bronnøysund Register Center. You will be prompted to fill a “Start and register a business” form and then choose the type of company you are going to open.
There are three types of companies in Norway:
1. Private Limited Company (AS)
International businesses mostly register as a private limited company in Norway. Here’s what you need for that:
- NOK 30,000 (USD 3,600) deposited in a Norwegian bank that you can access later when your company is registered.
- A registration fee of NOK 5,570 (USD 668) to register your company to the Register of Business Enterprises.
- At least two company directors, one of whom should be a European or Norwegian citizen.
- Meet the obligation of submitting the annual accounts of company to the Register of Company Accounts
2. Norwegian Branch of a Foreign Company (NUF)
If your business already exists in a foreign country, you have the option of operating a new branch in Norway. Most of the businesses expanding their operations to Norway usually opt for this option as it is both easier to set up and shut down. Moreover, if you opt for this option, there won’t be any minimum requirement for share capital.
Your Norwegian branch would be registered as a regional office of the parent company, and not as a separate entity. However, you will need to show the parent company’s assets in the balance sheet of your Norwegian branch. Also, your parent company will be responsible for any debts at the Norwegian branch.
As a business operating in Norway, your branch will have to meet all the obligations and labor laws of Norway and pay taxes. The only situation where your Norwegian branch won’t be responsible for paying the taxes is when your parent branch is in a country with a double taxation agreement with Norway.
3. Sole Proprietorships
Sole proprietorships, as you can guess, are for individuals who are working alone. To register for a sole proprietorship in Norway, you will need to have a business address in Norway. But you don’t necessarily have to be a resident.
Applying for Norwegian Identification Number
In addition to registering your company in Norway, you will also need a Norwegian identification number and a Norwegian business address if you are a foreign national. A Norwegian identification number, also known as D-number or personal ID number, can be applied for at the same time as registering at the Bronnøysund Register Center. A D-number is your access to availing yourself of all the public services offered in Norway.
What are the Legal Obligations and Responsibilities You Need to Meet?
Just like any other country, you will need to meet certain legal obligations to operate a business in Norway:
As a business operating in Norway, you will be required to register your company in the VAT register as soon as your yearly revenue exceeds NOK 50,000 (USD 5990).
If your business is in the VAT register, you should comply with the following:
- Charge value-added tax on your goods and services on the behalf of Norway.
- Calculate the amount of VAT you will have to pay when you import any goods for your business.
- Notify the Norwegian Tax Administration about the amount of value-added tax you have paid and collected in a certain period. Make sure that these numbers are the latest figures.
- Pay the difference between the value-added tax you have charged on your products/services and the value-added tax you have paid for importing the goods, to the Norwegian state.
If you recruit new people in Norway for your business, you will have to comply with all the labor laws and responsibilities including:
National Insurance Contributions
As an employer in Norway, you will be required to pay the national insurance contribution for your workforce. This is a part of Norway’s National Insurance scheme that every business must comply with. These contribution rates vary depending on where in Norway you are based. You can check the national insurance contribution rates for the different zones of Norway here.
Occupational Pension Program
As a business operating in Norway and employing a workforce, you will also have to establish an occupational pension scheme for your employees if you meet the following conditions:
- Your business employs two people with a salary and working time of at least 75% of that of a full position.
- Your business employs at least one person who has no ownership or shares in your business and has a salary and working time of at least 75% of that of a full position.
- Your business employs a number of people with a salary and working time of at least 20% of that of a full-time position, provided that these accumulate to the equivalent of two full positions.
This pension scheme must be set in motion within six months after meeting the above-mentioned conditions. Once your pension plan has been established, it will be your responsibility to make sure that from their very first day at work, every employee in your company is included in this pension plan.
Occupational Injury Insurance
Norway also holds employers responsible for the occupational injury insurance for its employees. This can either be managed with private insurance companies or by the business itself. Every injury insurance must include coverage for the following situations:
- If an employee has been injured or is sick due to an occupational accident.
- If an employee is sick with an illness that is considered equal to an occupation accident according to the National Insurance Act of Norway.
- If an employee is injured or ill due to the dangerous substances or operations at work.
- Compensation given if employee loses their capacity of working or earning income.
- Insurance coverage to spouses or cohabiting partners if any of the employee dies.
However, do note that you have a right to the tax deductions for these costs. You will not be required to pay any National Insurance contributions for occupational injury insurance.
Other Labor Laws
Apart from the laws mentioned above, there are many minor laws, regulations, and limitations that every business operating in Norway should meet, like holidays and sick leave. Most of these regulations and laws are similar to those of the EU so if you are familiar with them, you won’t have any issue understanding Norway’s laws. But be sure to read and understand every single law as you will have to abide by all of them.
How is Norway’s Business Culture?
A big aspect of launching a business overseas is understanding their culture, both social and business. Norway’s business culture has little to no hierarchy and has a flat structure. Businesses value their employees’ input and often include them in decision making. They consider everyone equal.
Cooperation and team effort are highly valued and practiced in Norway. In fact, the Norwegian model for businesses has strong cooperation between the government, the employee organizations, and the employer federations. There is also open cooperation between the company heads and their employees. There is a strong emphasis on gender equality in Norway, with a drive to treat everyone equally irrespective of their gender.
Here are some key takeaways for you to understand the Norwegian business culture:
- Little to no hierarchy and flat structure.
- Cooperation and involvement of employees.
- Relatively relaxed communication style.
- Trust among each other.
- An extremely healthy work-life balance.
- Gender equality and minimal bias.
- Empowered employees.
- Encouragement of risk taking/’out of the box’ thinking.
Setting Up a Business in Norway
To establish your business entity in Norway, your home country’s embassy in Oslo can be very supportive. For instance, the U.S. embassy in Oslo will be very cooperative in providing you all the information and support you need to start business in Norway.
Moreover, the Norwegian government and local organizations would also support and encourage you in establishing your business. For instance, the Invest in Norway is a program by the Norwegian government that aims to support foreign businesses. It has a reach in over 30 countries.
Other private organizations are also extremely focused on supporting entrepreneurs and startups. With various networking events conducted throughout Norway, these organizations create a thriving ecosystem for new businesses and provide them with incubation centers to grow. You can also hop on the local websites like Meetup to network with the local business owners and like-minded people.
Living in Norway
If you are starting a business in Norway and working in the country, you will need to get a residence permit too. Depending on where you currently reside, there are certain eligibility criteria you should meet to get a residence permit.
- If you are from the Nordic countries, you will just need visit the nearest Tax Administration process for changing the address and for the identification of your ID.
- If you are in the EU or EEA, you will have to register for the residence permit within three months after you have arrived in Norway.
- If you are from outside of the EU/EEA, you will be required to apply to the UDI to obtain a residence permit and work in Norway.
Starting a business in Norway is definitely going to be a great decision, thanks to its business-friendly administration. However, a compliance partner can make this transition very seamless for you by taking care of all the tedious documentations processes and legal obligations, while you focus solely on your business.