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11 July 2018 Norway proposes new requirements for applying reduced withholding tax rates on dividend payments to foreign individual shareholders In Norway, nonresident investors must -as a starting point- renew their certificate of residence every third year in order to obtain reduced rates of withholding tax (WHT) on dividends payments. The Norwegian Government suggests that individual shareholders, however, should be exempt from this renewal obligation, provided that the individual does not receive dividends in excess of the following threshold the year prior to the scheduled renewal of the certificate:
Dividend payments to nonresident shareholders are generally subject to WHT at the statutory rate of 25%, unless a lower rate or exemption applies pursuant to an applicable tax treaty or domestic legislation. The Norwegian Government introduced new documentation and approval requirements for obtaining reduced or zero WHT rates on dividend payments from Norwegian companies to nonresident shareholders.1 For shares not registered with VPS, Norwegian distributing companies are still allowed to self-assess the applicable rate of WHT, provided that the distributing company knows that the receiving shareholder meets the criteria for a reduced or zero-rated WHT.2 For shares registered with VPS or investments made through nominees' accounts, the new documentation requirements establish the obligation of the foreign shareholders to provide a certificate of residence issued by their tax authorities, which cannot be older than three years at the time of the dividend payment. The foreign shareholders would also have to provide a statement confirming their status as beneficial ownership of the shares, which cannot be older than three years at the time of the dividend payment. It was initially proposed that the new documentation requirements were going to be implemented on 1 January 2018, but such date was subsequently postponed to 1 January 2019. In light of feedback received after the hearing, the Norwegian Government has now proposed to amend the documentation requirements for individual shareholders. As a starting point, all individual shareholders must obtain a certificate of residence in order to obtain a reduced rate of WHT in accordance with a tax treaty. This certificate must be renewed every third year. Due to significant costs that may be required for renewing such certificate, the Norwegian Government has proposed to implement certain exemptions for individual shareholders, which would not require a renewal if the dividends received by the specific shareholder do not exceed the following thresholds in the year prior to the scheduled renewal of the certificate:
For shares registered with VPS, the threshold will comprise all dividends received from Norwegian companies, which the shareholder owns through the same global custodian or sub-custodian. For shares not listed or registered with VPS, the threshold will be based on the amount of dividends received from the distributing company in question, and not on the aggregated dividends received from all Norwegian resident companies. It should be noted that individual investors already having Norwegian investments when the documentation requirements enter into force, are not required to obtain a certificate of residence for the first three-year period. Whether these individual investors are obliged to present a certificate of residence after the first three-year period has lapsed, depends on whether the dividends received in the year prior to the scheduled renewal of the certificate, have exceeded the abovementioned thresholds. It is proposed that the amendments will be effective from 1 January 2019, together with the effective date of the other documentation and approval requirements. 1 See EY Global Tax Alert, Norway to impose new tax liability rules and requirements for applying reduced withholding tax rate on dividend payments to foreign shareholders, dated 28 March 2017. 2 See EY Global Tax alert, Norway clarifies scope of new withholding tax regulations for shares not registered in VPS, dated 3 November 2017.
Document ID: 2018-5846 |
