How to Set Up a Subsidiary Company in Norway?

Setting up a subsidiary company in Norway involves creating a legally independent entity that is fully or majority-owned by a foreign parent company. Many businesses expand to Norway for its stable economy, highly skilled workforce, and strategic location in Scandinavia. The country also has strong participation in global trade agreements, including the European Economic Area (EEA) and other key international partnerships.

This blog will cover the key steps to establish a subsidiary in Norway, including legal requirements, registration procedures, and tax obligations. It will also provide compliance responsibilities and practical tips for a successful market entry.

Key Takeaways

• Legal Structure and Ownership: Foreign investors can establish a Private Limited Company (AS) in Norway, which offers limited liability and requires a minimum capital of NOK 30,000.
• Labor and Employee Considerations: Subsidiaries must comply with Norwegian labor laws, including registering employees with NAV for social security.
• Tax Incentives and Compliance: Norway offers attractive tax incentives for foreign investors, especially in sectors like renewable energy, technology, and industrial development. Foreign-invested subsidiaries must register for corporate income tax (CIT) and VAT with the Norwegian Tax Administration and file annual returns, ensuring compliance with Norwegian Accounting Standards (NAS) or IFRS.

What are the Types of Subsidiaries in Norway?

Understanding how to establish a subsidiary company in Norway involves selecting the appropriate structure, which determines the level of control, legal responsibilities, and the type of activities the entity can undertake. The following are the main types of subsidiaries:

Wholly Foreign-Owned Enterprise (WFOE)

This is a company fully owned (100%) by the foreign parent company. It operates as an independent legal entity in Norway, allowing full control over operations, management, and profits. This structure is ideal for investors seeking autonomy without local partners, making it a preferred choice for business incorporation.

Joint Venture (JV)

A JV involves cooperation between a foreign investor and a Norwegian company, with shared ownership and responsibilities. This model is often used in sectors where local knowledge, networks, or legal requirements make full foreign ownership difficult or less effective.

Branch Office

A branch office is an extension of the parent company and not a separate legal entity. The foreign parent retains complete control but is also fully liable for the branch’s operations.

Representative Office

A representative office can only conduct non-commercial activities, such as market research and promotion. It cannot generate revenue or sign contracts, making it a low-cost option for exploring the market.

Step-by-Step Guide to Setting Up a Subsidiary in Norway

Opening a subsidiary in Norway involves several legal and administrative procedures. Below is a step-by-step guide outlining the key stages to establish and register your subsidiary successfully:

Step 1: Choose the Appropriate Business Structure

Decide whether your subsidiary will be a WFOE or a joint venture. Your choice will depend on the industry, ownership goals, and whether local partnerships are required by law. A WFOE allows complete foreign ownership and full control, and a JV involves partnering with a local entity.

Step 2: Reserve the Company Name

Choose a unique name for your subsidiary and ensure it adheres to the naming guidelines in Norway. The name must be distinct and not conflict with existing businesses. You will submit this name to the Norwegian Business Register (Brønnøysundregistrene) for approval.

Step 3: Prepare Founding Documents

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA). These documents should include the subsidiary’s purpose, ownership structure, governance, and capital contributions. For joint ventures, these documents will outline the terms of the partnership.

Step 4: Register the Company with the Norwegian Business Register

Submit your registration application to the Norwegian Business Register (Brønnøysundregistrene). Required documents include:

• The MOA and AOA.
• Proof of the parent company’s incorporation.
• Identification documents for directors and shareholders (e.g., passports or national IDs).
• Proof of a local address (lease agreement or property ownership document).

Step 5: Obtain a Business License

After registering, apply for a business license from the relevant local authorities. For certain sectors, such as healthcare or finance, additional sector-specific licenses may be required.

Step 6: Open a Corporate Bank Account

To operate, you must open a corporate bank account with a local Norwegian bank. Required documents for opening the account include:

• The company’s registration certificate.
• The parent company’s documents.
• Identification documents of the legal representatives.

Step 7: Tax, Social Security Registration, and Ongoing Compliance Requirements

Register for a Tax Identification Number (TIN) and VAT with the Norwegian Tax Administration (Skatteetaten). Register employees for Social Security with NAV. Ensure ongoing compliance by filing annual tax returns, maintaining accurate accounting records, undergoing yearly audits, and renewing the business license as required. Report any changes to the Norwegian Business Register.

Key Benefits of Establishing a Subsidiary in Norway

Setting up a subsidiary company in Norway offers significant strategic and operational advantages for foreign investors looking to expand into Scandinavia and the European market. With its stable economy, transparent legal system, and strong trade connections, Norway is an attractive destination for international businesses. 

The following are the main advantages:

• Access to a Stable and Wealthy Market: Norway boasts one of the highest GDP per capita rates in the world, a highly educated workforce, and a growing consumer market, particularly in sectors such as energy, technology, and finance.
• Strategic Location in Europe: Located at the crossroads of Scandinavia, Norway offers easy access to European Union (EU) markets, the Nordic region, and other international markets. It is well-positioned for businesses seeking to tap into the European Economic Area (EEA) market and benefit from its trade agreements.
• Tax Incentives and Preferential Policies: Norway offers various tax incentives for foreign investors, especially in sectors like renewable energy, technology, and industrial development. The government provides investment allowances, tax credits, and support for research and development (R&D) activities to foster innovation.
• Complete Legal Control and Ownership: Foreign investors can establish wholly owned subsidiaries (WOS) in Norway, allowing for complete control over business operations, finances, and decision-making.
• Participation in Global Trade Agreements: As a member of the European Economic Area (EEA) and numerous other trade agreements, Norway benefits from access to the EU’s single market, along with preferential trade agreements in sectors such as technology, energy, and manufacturing.

Essential Documents for Registering a Subsidiary

If you’re researching how to form a subsidiary in Norway, preparing the correct documentation is a critical step in the process. Norwegian authorities require a detailed set of legal and corporate documents to approve foreign-invested enterprises. Below is a list of the essential paperwork you’ll need:

• Application for Registration: A completed form with details on business activities, ownership, and financials.
• Memorandum of Association (MOA): Outlines the subsidiary’s purpose, capital structure, and shareholder rights.
• Articles of Association (AOA): Defines internal governance and operational rules.
• Proof of Parent Company’s Incorporation: Copy of the parent company’s certificate of incorporation.
• Director and Shareholder Identification: Passport copies or national IDs of directors and shareholders.
• Proof of Local Address: Lease agreement or property ownership document for the subsidiary’s registered office.
• Business Plan: A plan outlining the subsidiary’s objectives, activities, and financial projections (if required).
• Capital Deposit Proof: Documentation showing the required minimum capital deposited into the corporate bank account.
• Commercial License Application: Request for a business license for legal operation.
• Tax Registration Forms: Forms to obtain a Tax Identification Number (TIN) from the Norwegian Tax Administration.

Note: If you are not sure about setting up a subsidiary company in Norway, it’s advisable to work with a local legal expert to ensure accuracy and full compliance.

Legal Structures Available for Subsidiaries in Norway

When considering setting up a subsidiary company in Norway, it’s essential to choose the right legal structure. The type of entity you register affects your ownership rights and liability. In Norway, foreign investors typically establish subsidiaries under one of the following legal structures:

• Private Limited Company (Aksjeselskap – AS): The most common structure for subsidiaries, offering limited liability and requiring a minimum capital of NOK 30,000. This structure is ideal for foreign businesses seeking control and legal protection.
• Public Limited Company Allmennaksjeselskap – ASA): Used for larger businesses or those seeking public investment, with a higher capital requirement of NOK 1,000,000. It allows shares to be publicly traded.
• Branch Office: An extension of the foreign parent company, not a separate entity. The parent company holds full responsibility for the branch’s operations and liabilities.
• Representative Office: For non-commercial activities like market research and promotion. It cannot generate revenue and is ideal for businesses exploring the market with minimal investment.

Note: For most foreign investors who are looking at how to create a subsidiary in Norway, an AS is the preferred choice when forming a subsidiary in Norway due to its flexibility, control, and legal safeguards.

Taxation Rules and Incentives for Subsidiaries

Understanding Norway’s tax system is essential when planning how to set up a parent company with subsidiaries in Norway. The country offers a competitive corporate tax regime along with attractive incentives to encourage foreign investment.

Here’s an overview of the taxation rules and benefits for foreign-invested subsidiaries:

Corporate Income Tax (CIT)

Norway applies a 22% corporate income tax (CIT) rate on most businesses, including foreign-invested subsidiaries. This rate applies to taxable income calculated according to Norwegian Accounting Standards or International Financial Reporting Standards (IFRS). Certain industries, such as the oil and gas sector, may face higher taxes depending on specific regulations.

Tax Incentives for Foreign-Invested Subsidiaries

Norway offers various tax incentives to attract foreign investment, particularly in sectors such as renewable energy, technology, and manufacturing. Key incentives include:

• R&D Tax Deductions: Companies engaging in research and development may benefit from deductions on R&D expenses.
• Tax Allowances: Specific allowances for investments in industrial projects or the use of renewable energy sources.
• Investment in Special Zones: Tax exemptions and reductions for businesses located in certain regions or Special Economic Zones (SEZs).

Tax Compliance

All foreign-invested subsidiaries in Norway must register for corporate income tax (CIT) with the Skatteetaten. They are required to submit annual tax returns within six months after the fiscal year-end. Subsidiaries must also make quarterly tax payments throughout the year.

Regulatory and Compliance Requirements in Norway

Whether you’re setting up a subsidiary or a parent company in Norway or exploring how to start a parent company in Norway, understanding ongoing compliance is essential. Businesses must meet legal, tax, and reporting obligations to operate smoothly and avoid penalties.

The following are the key compliance requirements:

• Tax Filings: Subsidiaries must file annual CIT returns electronically by 31 May of the year following the fiscal year. Extensions may be granted upon application. Also, advance payments are due on 15 February and 15 April each year. Any remaining tax balance must be paid by 31 May to avoid interest charges.
• Accounting Standards: Financial statements must comply with Norwegian Accounting Standards or IFRS, depending on the company’s size. These must be prepared in Norwegian, and larger companies are required to undergo annual audits by licensed auditors.
• Labor and Insurance: Subsidiaries must register employees with the Norwegian Labour and Welfare Administration (NAV) for social security and comply with Norwegian labor laws.
• Licensing and Reporting: Any changes to the business scope, business shareholding structure, or capital must be updated with the Brønnøysundregistrene.
• Transfer Pricing: For companies involved in related-party transactions, Norway requires compliance with transfer pricing regulations.

Note: Following incorporation, subsidiaries in Norway are required to register for CIT, file annual returns, make quarterly tax payments, and comply with Norwegian Accounting Standards (NAS). They must also maintain accurate financial records and adhere to labor laws to ensure full compliance with Norwegian regulations.

Do You Need a Physical Address for a Subsidiary in Norway?

Yes, a physical, commercially zoned address is required when setting up a subsidiary company in Norway. Virtual offices are not permitted, but coworking spaces can be used if they offer a private leaseable area. For certain industries, the address may need to be in an approved industrial zone. Any changes to the address must be reported to the Norwegian Business Register.

Operational Setup for a Subsidiary in Norway

After registration, the next step in setting up a subsidiary company in Norway is operational setup, including contracts, working hours, and social security registration with NAV. Foreign employees will need work permits and residence permits. A physical office address is required for registration, which could be a leased office or a coworking space.

The subsidiary must comply with Norwegian Accounting Standards (NAS) or IFRS and maintain accurate financial reporting. It must also provide mandatory employee benefits, such as health insurance and pensions, through NAV. Additionally, the subsidiary should ensure its infrastructure and systems meet local operational requirements.

How to Open a Business Bank Account for a Subsidiary in Norway?

Opening a bank account is essential when setting up a subsidiary company in Norway. It allows for capital contributions, daily transactions, and tax compliance. Here are the key steps:

1. Select a bank: Choose a local or international bank operating in Norway, such as DNB, Nordea, or SpareBank 1, that offers corporate banking services.
2. Prepare required documents: To open a business bank account, you’ll need the Company Registration Certificate, TIN, AOA, proof of registered office address, identification documents for directors, and the corporate seal (if applicable).
3. Visit the bank: The legal representative (or authorized person) must open the account in person.
4. Submit documents and open the account: Provide all required paperwork to the bank officer.
5. Transfer charter capital: Deposit the registered capital from the parent company to the capital account.
6. Register with tax authorities: Notify the Norwegian Tax Administration (Skatteetaten) of the bank account details as part of tax compliance.

Is an Operating Agreement Necessary for a Subsidiary in Norway?

In Norway, an Operating Agreement is not required, but subsidiaries must have an AOA and an MOA. These documents outline governance, ownership, and operations. While not mandatory, they are essential for clarity on decision-making, profit distribution, and shareholder roles, especially for Joint Ventures or subsidiaries with multiple shareholders. They help ensure legal compliance and smooth business operations.

Opening a Branch vs. a Subsidiary: What’s the Difference?

When expanding into Norway, foreign companies can choose between establishing a subsidiary or opening a branch office. Both structures allow a business presence, but they differ significantly in terms of legal status. Here is a concise comparison table outlining the key differences between the two:

How Commenda Can Help You Expand in Norway

Expanding into Norway requires navigating complex legal, tax, and operational processes. Commenda provides end-to-end support to ensure a smooth, compliant, and strategic market entry.

With deep local expertise, Commenda assists with every step of incorporation, from choosing the right business structure to securing investment licenses and completing company registration. Our team also provides ongoing compliance, payroll, and legal support to keep your operations running seamlessly.

Book a demo today to see how Commenda can simplify your expansion into Norway.

FAQs

Q. How much does it cost to set up a subsidiary in Norway?

The cost of setting up a subsidiary in Norway depends on the type of company and the services required. For a Private Limited Company (AS), the minimum capital requirement is NOK 30,000. Additional costs may include registration fees, legal fees, and service charges for accounting, audits, and other business services.

Q. How long does it take to register a subsidiary in Norway?

The registration process in Norway typically takes around nine working days if all documentation is in order. The time can vary depending on the type of business and complexity, including obtaining tax registration and completing other required procedures.

Q. Can a foreigner fully own a subsidiary in Norway?

Yes, foreigners can fully own a subsidiary in Norway, particularly in most sectors.  However, certain regulated industries may have specific requirements or restrictions.

Q. What are the common challenges when opening a subsidiary in Norway?

Common challenges include navigating bureaucratic procedures, ensuring compliance with Norwegian labor laws and tax regulations, understanding VAT rules, and adapting to language barriers. 

Q. Do subsidiaries in Norway need a local director or representative?

Yes, a subsidiary in Norway must appoint at least one local director. The director does not have to be Norwegian, but must be a resident of Norway or another EEA country. 

Q. What are the annual compliance requirements for subsidiaries in Norway?

Subsidiaries must file annual tax returns, including corporate income tax and VAT returns, and comply with NAS or IFRS. Subsidiaries must also undergo an annual audit if required by law and submit financial statements to the Norwegian authorities.

Q. Can a subsidiary hire employees directly in Norway?

Yes, a subsidiary can hire employees directly in Norway. It must comply with Norwegian labor laws, including signing employment contracts, registering employees for social security and pension plans, and following wage and working conditions regulations.

Q. What happens if a subsidiary fails to meet compliance rules in Norway?

Failure to comply with Norwegian regulations can lead to penalties, including fines, interest on late payments, and administrative sanctions. Non-compliance may also result in the suspension or revocation of the business license.