Norway, like many other countries, has rules to prevent tax deferral and avoidance through controlled foreign companies in low-tax jurisdictions. The Norwegian rules are known as the NOKUS rules (norskkontrollert utenlandsk selskap) and are found in Sections 10-60 to 10-68 of the Tax Act. This article explains when the rules apply, the exemptions and how NOKUS income is taxed, and is written for Norwegian shareholders with interests in foreign companies and for international groups.
Purpose and main rule
Under the NOKUS rules, Norwegian shareholders in a Norwegian-controlled company or other entity in a low-tax country are taxed on their proportionate share of the entity’s profits, regardless of whether the profits are distributed. The purpose is to prevent income from being accumulated free of Norwegian tax in low-tax countries.
When do the rules apply?
Three conditions must be met:
Norwegian control: the entity must be controlled by Norwegian taxpayers.
Low-tax country: the entity must be resident in a low-tax country.
Type of entity: the rules apply to companies and other independent entities, as well as certain other assets and arrangements.
Norwegian control
As a main rule, Norwegian control exists when at least half of the shares or capital in the entity is owned or controlled, directly or indirectly, by Norwegian taxpayers. Control is assessed both at the beginning and at the end of the income year. The Norwegian owners do not need to act together. Special rules apply where control changes during the year.
Low-tax country
A country is a low-tax country if the general income tax on the entity’s total profits is less than two-thirds of the tax that would have been charged if the entity had been resident in Norway. The comparison is based on the effective tax burden under the rules of the other country, taking into account the tax base and not only the nominal rate.
Guiding lists of countries that are, and are not, regarded as low-tax countries have been issued. The lists are not conclusive for every type of entity or income, and a concrete assessment may be required.
Exemptions
Treaty countries
The NOKUS rules do not apply to entities resident in a country with which Norway has a tax treaty, provided the entity is covered by the treaty and its income is not mainly of a passive nature.
Entities in the EEA
The NOKUS rules do not apply to entities that are genuinely established and carry on genuine economic activity in an EEA state. Whether this is the case depends on a concrete assessment of the entity’s presence and activities.
Calculating NOKUS income
Where the rules apply, the Norwegian shareholders are taxed on their share of the entity’s profit calculated under Norwegian tax rules, as if the entity were a Norwegian taxpayer. In practice, this requires the entity’s accounts to be adjusted to Norwegian tax rules and converted into Norwegian kroner. The income is assessed in a similar way to income from partnerships.
Losses
Losses in a NOKUS entity can only be carried forward against later profits from the same entity, and cannot be set off against the shareholder’s other income. Documentation requirements apply.
Credit for foreign tax
To avoid double taxation, the Norwegian shareholders may claim a credit for tax paid by the entity abroad, limited to the Norwegian tax on the same income.
Dividends and gains
Distributions from a NOKUS entity are as a main rule tax-exempt to the extent they are covered by income already taxed under the NOKUS rules.
For personal shareholders, special rules apply. According to the Norwegian Tax Administration’s guidance, 78% of dividends received from a NOKUS company is taxable, and the taxable amount is multiplied by the adjustment factor for shares (1.72 for 2026) before the 22% tax rate is applied. The aim is to align the overall tax burden with that on dividends from Norwegian companies.
The tax basis of the shares is adjusted for income that has been taxed under the NOKUS rules, which affects the gain or loss on a later sale.
Change of control
If an entity becomes Norwegian-controlled during the income year, special rules determine whether the shareholders are taxed under the NOKUS rules for that year. If Norwegian control ceases, the participants may be required to settle tax on gains on the entity’s assets and liabilities.
Holding and shipping companies
Whether a holding company is resident in a low-tax country may depend on how dividends and gains are taxed in that country. For shipping companies, the comparison may be made with the Norwegian tonnage tax regime rather than the ordinary corporate tax rules.
How we can help
We assist Norwegian shareholders and international groups with assessing whether the NOKUS rules apply, structuring of foreign investments and related tax questions. You can read more about the firm at advokats.no or get in touch through our contact page.
This article provides general information as of 29 October 2026 and is not legal advice for your specific situation.
