Tax deduction for investment in startup companies – “entrepreneurial deduction”

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  • Introduced in the summer of 2017, and means that personal investors can receive a deduction of up to NOK 500,000 in their personal income for investments in start-up companies. The investment must be made in person or from a privately owned limited company.
     
  • Requirements for the share deposit:

    • Has to happen when you make a new subscription of shares.

    • Must be at least NOK 30,000 for each investor and each company, and each limited company cannot receive more than NOK 1.5 million annually in share deposits that provide deduction for the investor.

    • The company must report to the tax authorities who has the right to entrepreneurial deductions.
       

  • Requirements for the recipient of the share deposit:

    • Must be a Norwegian limited company or equivalent company domiciled in a country within the EØS.

    • Cannot be older than 6 years old, including the foundation year.

    • Cannot have employees who make up 25 full-time equivalents or more in the year of contribution (if a recipient is part of a group, this applies to the group as a whole).
    • Cannot have total operating income or total balance sheet total of NOK 40 million or more in the year of the contribution (if a recipient is part of a group, this applies to the Group as a whole).
    • Public bodies cannot control alone or together more than 24% of the capital or voting rights in the company.
    • At the end of the year the company or capital increase is registered in the Register of Business Enterprises or the following calendar year, the company must have an annual salary expense which provides a basis for employer's contribution of at least NOK 400,000 (may not be an investor or investor's close relative).
    • The company must primarily conduct other activities than passive asset management.
    • The company cannot be in financial difficulties at the time of the company's contribution.  
       
  • Connection requirements:
    • No deduction will be granted if the investor or investor's close relative is or has been a shareholder or employee in the company or in another company in the same group, or is employed by the owner who provides the basis for entrepreneurial deductions.
    • The investor must keep the shares for at least 3 calendar years after the end of the calendar year the investment is registered in the Register of Business Enterprises.
    • Investors or investors close relatives cannot receive dividends from the company during the period in which ownership is required – which means 3 years after the investment year.