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Norway: Market Profile

Picture: Norway factsheet
Picture: Norway factsheet

1. Overview

Norway is the world's third-largest gas exporter and one of the world's largest oil exporters. The population enjoys one of the world's highest standards of living, in large part due to the discovery in the late 1960s of offshore oil and gas. The country is richly endowed with natural resources, such as oil, hydro power, fish, forests, and minerals, and is highly dependent on the petroleum sector, which accounts for nearly half of exports of goods. The Norwegian government controls key areas, such as the vital petroleum sector, through large-scale, state-majority-owned enterprises. Norway's sovereign wealth fund makes it well placed to weather macroeconomic headwinds.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

Srptember 2017
Erna Solberg claimed a new mandate as prime minister following elections.

2019-2022
The start-up of the Johan Sverdrup Project in 2019 will have a significant impact on oil production in Norway. Phase II at the Johan Sverdrup development will provide a significant source of investment and production in the coming years. This phase is slated for start-up in 2022.

Sources: BBC country profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Norway real GDP and inflation
Graph: Norway real GDP and inflation
Graph: Norway GDP by sector (2017)
Graph: Norway GDP by sector (2017)
Graph: Norway unemployment rate
Graph: Norway unemployment rate
Graph: Norway current account balance
Graph: Norway current account balance

e = estimate, f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: May 14, 2019

4. External Trade

4.1 Merchandise Trade

Norway merchandise trade
Norway merchandise trade

Source: WTO
Date last reviewed: May 31, 2019

Graph: Norway major export commodities (2018)
Graph: Norway major export commodities (2018)
Graph: Norway major export markets (2018)
Graph: Norway major export markets (2018)
Graph: Norway major import commodities (2018)
Graph: Norway major import commodities (2018)
Graph: Norway major import markets (2018)
Graph: Norway major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: May 14, 2019

4.2 Trade in Services

Graph: Norway trade in services
Graph: Norway trade in services

e = estimate
Source: WTO
Date last reviewed: May 14, 2019

5. Trade Policies

  • Norway has been a World Trade Organization (WTO) member since January 1, 1995 and a member of GATT since July 1948. The discovery of oil and gas in adjacent waters in the late 1960s boosted Norway's economic fortunes. In referenda held in 1972 and 1994, Norway rejected joining the European Union (EU).

  • While not a member of the EU, as a member of the European Economic Area (EEA) (including Iceland and Liechtenstein, with access to the EU single market’s movement of persons, goods, services and capital), Norway continues to liberalise its foreign investment legislation to conform more closely to EU standards and has cut red tape over the last decade to make trade and investment easier.

  • European Free Trade Association (EFTA) countries enjoy access to one of the world’s largest networks of preferential trade relations, covering 80% of EFTA’s merchandise trade. This network continues to expand due to an ambitious agenda of negotiations. EFTA has also signed Joint Declarations on Cooperation with a number of countries to improve cooperation and as a possible first step to the negotiation of a free trade agreement (FTA).

  • There are extensive customs duties on agricultural products, which must be paid upon importation. However, it is often possible to avoid customs duties on these products partly or completely by applying for an exemption from the agricultural authorities in advance. Some of these exemptions are subject to tariff quotas.

  • Clothes and some other textile products are also subject to customs duties upon importation to Norway, but imports comprised by FTAs (such as the EEA with the EU) and the General System of Preferences (for developing countries) are exempt. As a result, clothes will, as a general rule, not be subject to customs duties as long as the importer presents the necessary certificates of origin.

  • There are no customs duties on other products than agricultural products, clothes and textile products.

  • The primary economic challenge for Norway over the coming decade will be reducing the dependence on oil. Around 16% of mainland Norwegian GDP is directly related to the offshore hydrocarbons sector. Furthermore, this headline figure understates oil's importance: onshore manufacturing businesses involved in the hydrocarbons supply chain, and ancillary services industries (eg, finance) are also heavily impacted by the fortunes of the energy sector. The vast majority of exports are related to oil and gas, both directly (oil and gas represents 35% of export volumes and 50% of export value) and indirectly (oilfield services and equipment, which represent a further 14% of exports). Importantly, there are no areas of the economy that are obvious 'national champions' in a post-oil world.

  • Manufacturing makes up only 10% of GDP when excluding hydrocarbons and shipping, and areas in which the government is encouraging growth, such as fishing and wood products, are too small to have a near-term impact.

Sources: WTO - Trade Policy Review, Government of Canada, Fitch Solutions

6. Trade Agreement

6.1 Multinational Trade Agreements

Active

  1. EEA-EFTA: This is a regional trade organization and free trade area consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland. The organisation operates in parallel with the EU, and all four member states participate in the European Single Market and are part of the Schengen Area. They are not, however, party to the EU Customs Union.

  2. EFTA-Hong Kong: The EFTA states signed an FTA with Hong Kong in Schaan, Liechtenstein, on June 21, 2011. The agreement entered into force on October 1, 2012 for Hong Kong, Iceland, Liechtenstein and Switzerland and November 1, 2012 for Norway. The agreement has a comprehensive scope, including trade in goods (industrial and processed agricultural goods, fish and other marine products), trade in services, investment, protection of intellectual property rights, government procurement, competition, trade and environment, and provisions on dispute settlement. Bilateral arrangements on agricultural products between the individual EFTA states and Hong Kong, also form part of the instruments establishing the free trade area between both sides. Alongside the FTA, the parties concluded an agreement on labour.

  3. South Korea-EFTA: The EFTA states signed an FTA with South Korea in Hong Kong on December 15, 2005. The agreement entered into force on September 1, 2006 for South Korea, Norway, Liechtenstein and Switzerland, and on October 1, 2006 for Iceland. The FTA covers all major areas of trade relations including trade in goods, trade in services, government procurement, competition and intellectual property. A joint committee was established for the supervision of the agreement, and a chapter provides for dispute settlement procedures. Moreover, the EFTA states and South Korea concluded bilateral agreements on basic agricultural products.

  4. EFTA-Turkey: The EFTA states signed an FTA with Turkey in Geneva, Switzerland, in December 1991. The agreement entered into force on April 1, 1992. The EFTA states signed a modernised and expanded FTA in Sauðárkrókur, Iceland, on June 25, 2018. The new agreement will enter into force and replace the existing one upon ratification by the EFTA states and Turkey. The agreement covers trade in industrial products as well as fish and marine products and processed agricultural products. The transitional period ended in January 1999. In addition, bilateral agricultural agreements between the individual EFTA states and Turkey have been concluded which form part of the instruments creating the free trade area. The objectives of the agreement (Article 1) are, inter alia, to promote, through the expansion of reciprocal trade, the harmonious development of economic relations between the Parties. The agreement includes provisions relating to the elimination of customs duties and other trade barriers as well as other trade-related disciplines such as rules of competition, protection of intellectual property, public procurement, state monopolies, state aid, and payments and transfers.

  5. EFTA-Mexico: The EFTA states signed an FTA with Mexico in November 2000. The agreement entered into force on July 1, 2001. The FTA covers trade in industrial products as well as fish and marine products. In addition, bilateral agricultural agreements between the individual EFTA countries and Mexico have been concluded which form part of the instruments creating the free trade area. In addition to covering trade in goods, it also includes trade in services, investment and public procurement within its scope.

  6. EFTA-Canada: The EFTA states signed an FTA with Canada in Davos, Switzerland, in January 2008. The agreement entered into force on July 1, 2009. It covers trade in industrial products, including fish and other marine products, and processed agricultural products. Basic agricultural products are covered by agreements concluded bilaterally between Canada and Iceland, Canada and Norway, and Canada and Switzerland, at the same time as the FTA. Switzerland represents Liechtenstein for purposes of these bilateral agreements, which form part of the instruments establishing a free trade area between the parties. The agreement aims at liberalising and facilitating trade in goods in conformity with the relevant WTO provisions. Most industrial goods, including fish and other marine products, will benefit from duty-free access to the respective markets as of the entry into force of the agreement.  The agreement also includes references to existing WTO obligations in the areas such as services, investment and public procurement. General principles regarding competition law and policy are also set out in the agreement. The Canada-EFTA Joint Committee, established by the agreement, will supervise the application of the agreement which also provides for binding arbitration.

  7. Egypt-EFTA: The EFTA states signed an FTA with Egypt in Davos, Switzerland, in January 2007. The agreement entered into force on August 1, 2007. The FTA covers trade in industrial products, including fish and other marine products, and processed agricultural products. In addition, individual EFTA states and Egypt concluded bilateral agreements on basic agricultural products, which form part of the instruments creating the free trade area. The main objective is to achieve the liberalisation of trade in goods. By January 1, 2020, customs duties on almost all industrial products will have been eliminated. The agreement also includes provisions relating to the elimination of other trade barriers as well as trade-related disciplines including rules of competition, state monopolies and subsidies. Moreover, the agreement contains provisions on the protection of intellectual property, investment, services, current payments and capital movements, government procurement, economic co-operation, and institutional and procedural matters. The agreement establishes a joint committee which supervises the application of the agreement and provides for binding arbitration.

  8. The EFTA states signed an FTA with the Gulf Cooperation Council in Hamar, Norway, on June 22, 2009 that entered into force on July 1, 2014. The coverage of the FTA includes trade in goods (industrial and processed agricultural goods, fish and other marine products) and services, government procurement, and competition. For investment and intellectual property rights, the parties agreed to conduct negotiations on those topics after the entry into force of the agreement. Basic agricultural products are covered by the bilateral agricultural agreements, which are part of the instruments establishing the free trade area between the parties.

  9. EFTA-Israel: The EFTA states signed an FTA with Israel in Geneva, Switzerland, in September 1992 that entered into force on January 1, 1993. Modernised and expanded, bilateral agricultural agreements were signed in Geneva on November 22, 2018. These new agreements will enter into force and replace the existing ones upon ratification by the respective EFTA states and Israel. The agreement covers trade in industrial products as well as fish and marine products. In addition, bilateral agricultural agreements between the individual EFTA states (Iceland, Norway and Switzerland) and Israel have been concluded which form part of the instruments creating the free trade area. Among the objectives of the agreement (Article 1) is the progressive liberalisation of trade in goods in conformity with the GATT. As of January 1, 1993, virtually all customs duties on trade in industrial goods and fish and other marine products were eliminated. The agreement includes provisions relating to the elimination of customs duties and other trade barriers as well as other trade-related disciplines such as rules of competition, protection of intellectual property, public procurement, state monopolies, state aid, and payments and transfers. Under the agreement a Joint Committee is established which supervises the agreement.

  10. The EFTA states signed an FTA with the Southern African Customs Union (SACU) in Höfn, Iceland, on 26 June 2006. The agreement entered into force on May 1, 2008. The agreement covers trade in goods and lays the foundation for a further engagement of the parties with regard to intellectual property, investment, trade in services and public procurement. A joint committee is established for the supervision and administration of the agreement, and provisions are included providing for consultations and dispute settlement procedures. In January 2018, EFTA and SACU launched a review process of the agreement aiming for a general update and development of the FTA.

Under Negotiation

MERCOSUR-EFTA: The EFTA States and the MERCOSUR States met for their seventh round of negotiations from February 11 to 15, 2019 in Buenos Aires, Argentina. A joint statement announcing the conclusion of the exploratory dialogue on a possible comprehensive FTA between the MERCOSUR states and the EFTA states was signed in Davos, Switzerland, on January 19, 2017. A total of seven negotiation rounds have been held since the first round in June 2017. Expert working groups normally convening during the rounds cover:

  • Trade in goods
  • Rules of origin
  • Trade facilitation
  • Sanitary and phytosanitary measures
  • Technical barriers to trade
  • Trade remedies
  • Competition
  • Trade in services
  • Investment
  • Intellectual property rights
  • Government procurement
  • Trade and sustainable development
  • Legal and horizontal issues

Sources: WTO Regional Trade Agreements Database, EFTA, Fitch Solutions

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Norway FDI stock
Graph: Norway FDI stock
Graph: Norway FDI flow
Graph: Norway FDI flow

Source: UNCTAD
Date last reviewed: May 14, 2019

7.2 Foreign Direct Investment Policy

  1. Norway welcomes foreign investment as a matter of policy and generally grants national treatment to foreign investors. Some restrictions exist on foreign ownership and use of natural resources and infrastructure. The government remains a major owner in the Norwegian economy and retains monopolies on a few activities, such as the retail sale of alcohol.

  2. In 2013, the Government established ‘Invest in Norway’, the official investment promotion agency, to help attract and assist foreign investors. There are about 5,500 foreign-owned companies in Norway.

  3. The SkatteFUNN research and development (R&D) tax incentive scheme is a government program that is designed to stimulate R&D in Norwegian trade and industry. Businesses and enterprises that are subject to taxation in Norway are eligible to apply for tax relief.

  4. Altinn is a web portal that serves as a one-stop shop for establishing a company and contains the necessary forms; it also provides an electronic dialogue between the business/industry sector, citizens and other stakeholders, and government agencies. The business registration processes are straight-forward, complete and open to foreign companies. It is worth noting, however, that registration of Norwegian Registered Foreign Business Enterprises cannot be done electronically.

  5. While not a member of the EU, as an EEA signatory, Norway continues to liberalize its foreign investment legislation to conform more closely to EU standards.

  6. Norway’s investment policies with regard to vis-a-vis third countries will likely continue to be governed by reciprocity principles and by bilateral and international agreements. The EEA free trade accord, which came into force for Norway in 1995, requires the country to apply principles of national treatment to EU members and the other EEA members – Iceland and Liechtenstein – in certain areas where foreign investment was prohibited or restricted in the past.

  7. Norway's investment regime is generally based on the national treatment principle, but ownership restrictions exist on some natural resources and on some activities (fishing/maritime/road transport). State ownership in companies can be used as a means of ensuring Norwegian ownership and domicile for these firms.

  8. Norway has traditionally barred foreign and domestic investors alike from investing in industries run by the government, including postal services, railways, and the retail sale of alcohol. In 2004, Norway slightly relaxed the restrictions, allowing foreign companies to bid on certain commercial postal services (eg, air express services between countries) and railway cargo services (notably, between Norway and Sweden).

  9. In 2016, the government initiated a reform of the railway sector leading to the first railway line to be put up for competition in 2018.

  10. The Norwegian government may allow foreign investment in hydropower (limited to 20%of equity), but rarely does so. However, Norway has fully opened the electricity distribution system to foreign participation, making it one of the most liberal power sector investment regimes in the world.

  11. Foreign investors may generally own real property, though ownership of certain real assets is restricted. Companies must obtain a concession to acquire rights to own or use various kinds of real property, including forests, mines, tilled land and waterfalls. Foreign companies need not seek concessions to rent real estate, eg, commercial facilities or office space, provided the rental contract period does not exceed 10 years. The two major laws governing concessions are the act of December 14, 1917, and the act of May 31, 1974.

  12. The Petroleum Act of November 1996 (superseding the 1985 Petroleum Act) sets forth the legal basis for Norwegian authorities' awards of petroleum exploration rights, production blocks and follow-up activity. The act covers governmental control over exploration, production, and transportation of petroleum.

  13. Foreign oil companies report no discrimination in the award of petroleum exploration and development blocks in recent licensing rounds. Norway has implemented EU directives requiring equal treatment of EEA oil and gas companies. The Norwegian offshore concession system complies with EU directive 94/33/EU of May 30, 1994, which governs conditions for awards and hydrocarbon development. Norway's concession process operates on a discretionary basis, with the Ministry of Petroleum and Energy awarding licenses based on which company or group of companies it views will be the best operator for a particular field, rather than purely competitive bids.

  14. The Norwegian government has dismantled former tight controls over the gas pipeline transit network that carries gas to the European market. All gas producers and operators on the NCS are free to negotiate gas sales contracts on an individual basis, with access to the gas export pipeline network guaranteed.

  15. Norwegian authorities encourage the use of Norwegian goods and services in the offshore petroleum sector, but do not require it. The Norwegian share of the total supply of goods and services on the NCS has remained at approximately 50% over the last decade.

  16. Norwegian legislation granting national treatment to foreign investors in the manufacturing sector dates from 1995. Legislation was repealed in July 2002 that formerly required both foreign and Norwegian investors to notify and, in some cases, file burdensome reports to the Ministry of Industry and Trade if their holdings of a company's equity exceeded certain threshold levels. Foreign investors are not currently required to obtain government authorisation before buying shares of Norwegian corporations.

  17. In 2004, Norway liberalised restrictions on acquisitions of equity in Norwegian financial institutions. Current regulations delegate responsibility for acquisitions to the Norwegian Financial Supervisory Authority and streamline the process. Financial Supervisory Authority permission is required for acquisitions of Norwegian financial institutions that exceed defined threshold levels (20%, 25%, 33% or 50%). The authority assesses the acquisitions to ensure that prospective buyers are financially stable and that the acquisition does not unduly limit competition.

  18. The authority applies national treatment to foreign financial groups and institutions, but nationality restrictions still apply to banks. At least half the members of the board and half the members of the corporate assembly of a bank must be nationals and permanent residents of Norway or another EEA nation. There is no ceiling on foreign equity in a Norwegian financial institution as long as the authority has granted permission for the acquisition. The Finance Ministry has abolished remaining restrictions on the establishment of branches by foreign financial institutions, including banks, mutual funds and others. Under the liberalised regime, Norway grants branches of foreign financial institutions the same treatment as domestic institutions.

  19. Media ownership is regulated by the Media Ownership Act of 1997 and the Norwegian Media Authority. No individual party, domestic or foreign, may control more than a third of the national newspaper, radio and/or television markets without a concession. National treatment is granted in line with Norway's obligations under the EEA accord. The introduction and growing importance of new media forms (including those emerging from the internet and wireless industries) has raised concerns that the existing domestic legal regime (which largely focuses on printed media) is becoming outmoded.

Sources: WTO – Trade Policy Review, Fitch Solutions

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Foreign tax credit- Norwegian limited liability companies that have paid taxes on foreign-source income may, under certain conditions, offset the Norwegian tax paid against the foreign tax paid.

- The tax credit is limited to the lower of the Norwegian tax paid on the same type of foreign income and the foreign tax actually paid.
 
- It is possible to carry forward unused foreign taxes for five years.
 
- A credit claimed in line with the regulations stated above may not be used in addition to deductions pursuant to other rules and regulations. These rules are very technical, and it should be noted that there are two different sets of income.
Roll-over regulations- The Norwegian Ministry of Finance has the authority to grant tax relief on the transfer of assets within a group.

- The transfer may be carried out between group companies (more than 90% ownership and voting rights) or partnerships (with mainly the same owners).

- If a tax relief is granted, the transfer would not trigger any taxation at the time of the transfer, but all tax positions, including the tax basis of the transferred assets, will be transferred to the acquiring company. A condition for the tax relief is normally that the companies remain within the group.

- The Ministry of Finance can also grant tax relief on the realisation of property, business, shares, etc during a reorganisation. The reorganisation must improve the efficiency of the business to qualify for tax relief, and, accordingly, administrative effects would not be sufficient.

- The tax relief must also help companies to carry out the reorganisation. In addition, the tax relief must not reduce the Norwegian tax base; the tax positions would be transferred to the new taxpayer.
SkatteFUNN R&D tax incentive scheme-All Norwegian companies and branches with R&D projects can apply for a deduction of up to 20% of incurred costs, limited up to a cost base of NOK25 million for self-developed R&D and NOK50 million for R&D purchased from approved institutions.

- If the company does not have taxable income for the income year in question, the company will receive a cash refund for the year following the income year.

- The main criterion for applying for SkatteFUNN is that the company has an R&D project with the aim of developing a new or improved asset, service or production process. There are no requirements regarding the type of business.

- The application for SkatteFUNN must be approved by the Research Council of Norway and is awarded for a maximum period of three years. If the application is approved, there is a requirement to submit a form attested by the company's auditor, together with the ordinary tax return, in order to obtain the tax incentive.
Other VAT exemptionsVAT exemptions with credit (zero-rated) include, but are not limited to, the following (please note that there might be specific conditions for the exemptions to apply):
  • Export of goods and services
  • Goods and services for Norwegian offshore and non-resident ships
  • Transfer of a going concern
  • Supply of newspapers (including e-newspapers) and books (does not include e-books, which are currently subject to the 25% VAT rate)
  • Sale of vessels and aircraft for use in taxable activity.
  • Sale of vessels for use in search and rescue.
In addition to the above-mentioned exemptions with credit, the Norwegian government has proposed to zero-rate supplies of e-books and electronic publications in the national budget for 2019. As the proposed VAT zero rating will require changes in the existing regulations and an approval from the ESA, the government expects that the VAT zero rating can enter into force from July 2019 at the earliest (subject to specific conditions).

Exemptions without credit include, but are not limited to, the following:
  • Supply of works of art owned by the artist
  • Health services
  • Social services
  • Financial services, including banking, insurance and the sale of shares (entities within the financial services sector are, in general, subject to a special financial activities tax)
  • Educational services
  • Sale of vessels for use in search and rescue.
  • Sale and lease of real estate (accommodation and lease of parking lots are taxable)
  • Services supplied by cultural and entertainment institutions
Exemptions, whereby an option to tax is available, include the letting of immovable property to VAT-liable lessees following a specific VAT registration with the VAT authorities.

The VAT rate of 12% applies to the television licence fee charged for broadcasting services provided by the Norwegian Broadcasting Company, domestic passenger transport services and procurement of such services, domestic ferry services related to transport of vehicles, accommodation services, cinema tickets, museum and gallery tickets, amusement park tickets, and sports events.

Sources: US Department of Commerce, national sources, Fitch Solutions

8. Taxation – 2019

  • Value Added Tax: 6-23%
  • Corporate Income Tax: 22%

Sources: National Sources, Fitch Solutions

8.1 Important Updates to Taxation Information

Norway's National Budget for 2019 included some changes in the country's tax legislation. Firstly, the tax rate has been reduced from 23% to 22% as of the income year 2019 and applies, in general, to both individuals and enterprises. The resource rent tax for hydropower companies is increased by 1.3% to 37.0%, and the special tax rate on petroleum is increased by 1% to 56%, to ensure that the general reduction of the tax rates are proceeds neutral in relation to these sectors. Regardless of location of management, all companies incorporated under Norwegian company law will be regarded as tax resident in Norway, unless the company is resident in another country according to a tax treaty. Additional limitations on tax deductibility of interest expenses for companies being part of a group have been introduced. In addition to the inter-company interest expenses, interest expenses to external lenders could also be regarded as not tax deductible. The limitations apply if the Norwegian group companies in total have annual net interest expenses exceeding NOK25 million.

8.2 Business Taxes

Type of TaxTax Rate and Base
Corporate Income Tax (CIT)22%; Certain companies within the financial sector are assessed at a CIT rate of 25%.
Petroleum Tax RegimeTax is based on net income at a marginal tax rate of 78%, which consists of the ordinary 22% CIT rate and a 56% special tax. All income is subject to 22% CIT, while only income from offshore production and pipeline transportation of petroleum from the Norwegian Continental Shelf (offshore tax regime) is subject to the additional 56% special tax.
VATThe general VAT rate is 25% and applies to all supplies of goods and services not qualifying for another rate or an exemption. A reduced rate of 15% applies to supply of food and beverages, excluding tobacco, alcohol, medicine, and water from waterworks. The reduced rate is not applicable to the supply of food and beverages consumed in restaurants and other food establishments.
Withholding Tax: Dividends25%
Property TaxesNot all municipalities impose property tax on real estate. The relevant rate varies between 0.2% and 0.7%, which is decided by the municipality
Stamp Taxes2.5% of fair value levied on the registration of a change of ownership of real estate.
National insurance contributionsThe employers’ contribution rate varies between 0% and 14.1% based on the municipality of the head office of the business.

Sources: National Sources, Fitch Solutions
Date last reviewed: May 14, 2019

9. Foreign Worker Requirements

9.1 Temporary Permits

Norway has a closed-border policy with strict immigration controls that are highly regulated. In general, all foreign nationals, except EEA countries, must have visas to enter Norway. Entrance for short-term visits—tourist visits, family visits, official assignments, business trips, study visits and certain other purposes no longer than three months—is allowed in accordance with the applicable visa. All other basis for stay in the Norwegian regulations are called permits rather than visas. All foreign nationals (except Nordic nationals) who wish to enter Norway must also carry valid passports or other identification officially recognised as valid travel documents.

Norway entered into the Schengen Agreement on March 25, 2001. Under the agreement, no passport controls apply to pass borders within the Schengen area. Passport controls will apply to pass the Schengen area’s outer border, both to enter and depart the area. Non-EEA nationals are subject to extended controls, that is, a search of the Schengen Information System to determine whether the individual is registered with a denial to enter. As a general rule, under the agreement, visas issued by Norwegian authorities are valid to enter the entire Schengen area. Likewise, visas issued by other Schengen countries are valid to enter Norway.

Norway has concluded agreements on visa-free entry for short-term visitors with approximately 94 countries, including EU and non-EU countries. Citizens of these countries are not required to obtain visas to enter Norway for short-term visits. Norway business visas are not required for citizens of Hong Kong for a stay up to 90 days. Other exceptions to the visa requirement may exist. For further details, contact a Norwegian Foreign Service mission or the Directorate of Immigration.

9.2 Work and Residence Permits

Foreign nationals for whom a visa is required must apply for a visa or residence permit in order to stay or work in Norway for any length of time. Foreign nationals for whom a visa is not required who intend to stay in Norway longer than three months or who want to work must apply for a residence permit.

Residence permits are granted only if a particular reason for living or working in Norway exists, such as a work assignment, a trainee assignment, cultural exchange or family immigration. Any person who applies for a work permit must receive a concrete offer of employment in advance. The applicant must also have adequate income. Nordic citizens do not need a residence permit to reside or work in Norway.

EU/EEA nationals do not need to apply for residence permits in Norway. They can do an advance registration online and appear in person at the authorities when they arrive in Norway. EU/EEA nationals need to register in Norway only if they intend to work and stay in Norway for more than three months.

9.3 Work permit application process

The residence permit application must generally be submitted from abroad before an individual enters Norway. Alternatively, the application may be submitted via a power of attorney by a third party in Norway. A first-time work permit or residence permit must be granted before a national who requires a visa may enter Norway. However, skilled workers may apply for a first-time residence permit after entry provided that they are legally in Norway. If they apply in Norway, they can submit the application either to the police district where they live or at a service centre for foreign workers.

All applications must be registered at the application Pportal. The Foreign Service mission can provide information about documents that must be included with the application. The Foreign Service mission sends the work or residence permit application to the Directorate of Immigration, which decides whether to grant the permit. After the application is considered, the applicant is informed of the results by the Foreign Service mission in the applicant’s home country or via a third party in Norway with a power of attorney. Foreign nationals from certain countries are requested by the police to complete a mandatory and free tuberculosis test within the first weeks after arrival in Norway.

9.4 Exempt categories

The following foreign nationals are exempt from the work permit requirement for employment situations lasting up to three months:

  • Commercial travellers, business travellers or individuals who will attend meetings or seminars, receive training or attend pre-contract sales or negotiations
  • Research workers, lecturers and others invited to Norway by educational or research institutions for professional or charity reasons
  • Technical experts, technicians, consultants or instructors; the purpose must be to install, check, repair or maintain machines or technical equipment, or to provide information on their use
  • Employees in private households or foreign nationals who are staying in Norway on visits
  • Professional athletes attending sports engagements in Norway
  • Civil servants who are paid by their own countries
  • Personnel of foreign rail, air, bus or truck services working internationally, and necessary watchmen and maintenance personnel on ships laid up in Norway
  • Journalists, foreign newspaper staff and radio or television teams on assignment in Norway, who are paid by foreign employers

9.5 Self-employment

Non-EEA nationals who are self-employed and have established a business abroad may be granted a residence permit for a period of up to four years. Also self-employed persons who intend to engage in a permanent business activity are entitled to a residence permit if the presence of the self-employed person in Norway and active participation in running the business is necessary for the establishment or continued operation of the business.

9.6 Optional simplified tax regime for foreign workers

From 2019, a simplified tax regime for foreign workers will be introduced to the Norwegian tax system. The simplified tax regime is optional, that is, the individual can choose to be part of the regular tax regime, as described above, or the simplified tax regime. In the simplified tax regime, employment income is taxed based on a gross method with a fixed rate of 25% (including the employee social security contribution). No deductions from the tax base are allowed. In addition, the tax is determined and assessed as final on an ongoing basis through the employer’s tax withholding and reporting to the tax administration.

To be eligible for the simplified tax regime, the individual must be considered a tax non-resident according to Norwegian law. The regime does not apply to offshore workers and foreign seafarers. In addition, the annual employment income must be below a certain threshold. Other conditions may apply; therefore, a case-by-case evaluation is required.

9.7 Social Security Contributions

Employers and employees, as well as self-employed individuals, must make social security contributions. Contributions are payable on all taxable salaries, wages and allowances and, for self-employed individuals, on personal income. Expatriates and foreign employers of employees working in Norway are subject to these contributions if an exemption (or reduction) is not available under a social security convention between Norway and the country where the expatriate or the employer is domiciled.

Sources: Government websites, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
Aaa (stable)
15/06/2018
Standard & Poor'sAAA (stable)
08/11/1990
Fitch Ratings
AAA (stable)15/03/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators


World Ranking
201720182019
Ease of Doing Business Index
6/190
8/190
7/190
Ease of Paying Taxes Index
26/190
28/190
30/190
Logistics Performance Index
N/A
21/160
N/A
Corruption Perception Index
3/180
7/180
N/A
IMD World Competitiveness11/63
8/63
N/A

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World Ranking
201720182019
Economic Risk Index Rank N/A1/2021/202
Short-Term Economic Risk Score
75.878.874.6
Long-Term Economic Risk Score80.582.182.1
Political Risk Index Rank N/A1/2021/202
Short-Term Political Risk Score96.792.992.9
Long-Term Political Risk Score97.197.397.3
Operational Risk Index Rank N/A10/20210/201
Operational Risk Score77.177.177.3

Source: Fitch Solutions
Date last reviewed: May 14, 2019

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
Business investment and consumption will drive Norwegian real GDP growth in 2019-20, as higher oil prices continue to buoy the economy. Greater investment in the hydrocarbon industry should be a key driver of growth, while a healthy labour market and lower corporate tax rates will also brighten prospects. Norway is politically stable, with strong property rights protection and an effective legal system and productivity is significantly higher than the EU average. Norway will remain a vital gas supplier to the EU in the coming years. However, tighter monetary policy, a slowdown in Europe and global trade tensions all cloud the short-to-medium term economic outlook.

OPERATIONAL RISK
Norway is a modern, highly developed country with a strong economy that is very open to outside capital and generally affords foreign investors the same privileges as nationals. Per capita GDP is among the highest in the world, boosted by success in the oil and gas sector and other world-class industries like shipping, shipbuilding and aquaculture. The major industries are supported by a strong and growing professional services industry (finance, ICT, legal), and there are emerging opportunities in cleantech, medtech and biotechnology. Strong collaboration between industry and research institutions attracts international R&D activity and funding. However, despite Norway's generally open investment regime, restrictions exist on ownership and activities in the fishing and maritime transport sectors of the economy. The OECD ranks Norway slightly behind the United States in terms of restrictions on foreign direct investment, particularly with regard to foreign personnel.

Source: Fitch Solutions
Date last reviewed: May 14, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Norway short term political risk index
Graph: Norway short term political risk index
Graph: Norway long term political risk index
Graph: Norway long term political risk index
Graph: Norway short term economic risk index
Graph: Norway short term economic risk index
Graph: Norway long term economic risk index
Graph: Norway long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Political and Economic Risk Indices
Date last reviewed: May 14, 2019

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Norway Score77.364.072.280.892.3
Developed States Average73.564.671.376.381.8
Developed States Position (out of 27)8
1514
111
Global Average49.750.349.8
49.049.8
Global Position (out of 201)10
5
21111

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Norway vs global and regional averages
Graph: Norway vs global and regional averages
Country
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk
Index
Crime and Security Risk Index
Denmark80.874.876.288.384.0
Netherlands80.365.978.288.688.4
Switzerland79.975.077.675.191.8
Sweden
79.367.778.187.583.8
New Zealand77.773.775.772.189.4
United Kingdom77.671.479.0
78.581.3
United States77.581.375.382.970.5
Norway77.364.072.280.892.3
Canada77.174.375.476.782.1
Finland
76.155.874.183.491.2
Austria75.460.871.980.588.3
Luxembourg75.254.277.680.088.9
Japan75.172.465.577.984.7
Ireland74.866.878.072.082.5
Germany74.365.569.081.281.7
Australia73.167.872.168.384.3
Spain72.659.468.980.981.3
France72.560.171.183.275.5
Belgium72.458.272.883.275.3
Portugal71.051.766.580.985.0
Iceland71.060.667.269.686.6
Liechtenstein70.559.878.161.582.6
Israel67.471.464.671.162.4
Malta66.254.969.060.880.1
Isle of Man65.869.162.449.382.3
Italy64.854.559.776.268.7
Greece58.954.249.268.963.2
Regional Averages73.564.671.376.381.8
Emerging Markets Averages46.048.146.544.744.8
Global Markets Averages49.750.349.849.049.8

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: May 14, 2019

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Norway

Graph: Major export commodities to Norway (2018)
Graph: Major export commodities to Norway (2018)
Graph: Major import commodities from Norway (2018)
Graph: Major import commodities from Norway (2018)

Note: Graph shows Hong Kong imports from/exports to Norway (by consignment)
Date last reviewed: May 14, 2019

Graph: Merchandise exports to Norway
Graph: Merchandise exports to Norway
Graph: Merchandise imports from Norway
Graph: Merchandise imports from Norway

Note: Graph shows Hong Kong imports from/exports to Norway (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: May 14, 2019


2017
Growth rate (%)
Number of Norwegian residents visiting Hong Kong21,777
-1.4

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs – Population Division


2017
Growth rate (%)
Number of European residents visiting Hong Kong1,929,824
-0.2
Number of developed states citizens residing in Hong Kong65,680
1.6

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs – Population Division, Fitch Solutions
Date last reviewed: May 14, 2019

11.2 Commercial Presence in Hong Kong


2017
Growth rate (%)
Number of Norwegian companies in Hong KongN/A
N/A
- Regional headquarters
- Regional offices
- Local offices

Sources: Hong Kong Trade Statistics, Census and Statistics Department

11.3 Treaties and Agreements between Hong Kong and Norway

Norway and Hong Kong have signed double taxation agreements that cover airline income (date of entry into force: August 23, 2001) and shipping income (date of entry into force: January 11, 2005).

Source: Inland Revenue Department

11.4 Chamber of Commerce or Related Organisations

Norwegian Chamber of Commerce Hong Kong
Address: Room 3003, 30/F, The Centrium, 60 Wyndham Street, Central, Hong Kong
Tel: (852) 6502 1630 (Whatsapp enabled)

Sources: Norwegian Chamber of Commerce Hong Kong

Norway-Hong Kong Chamber of Commerce
Email: post@nhkcc.com
Tel: (47) 9076 5979
Website: www.nhkcc.com
Please click to view more information.

Source: Federation of Hong Kong Business Associations Worldwide

Royal Norwegian Honorary Consulate in Hong Kong
Address: 26/F, Shanghai Industrial Investment Building, 48-62 Hennessy Road, Wanchai, Hong Kong
Email: hong-kong@norwayconsulate.com
Tel: (852) 2546 9881
Fax: (852) 2546 9887

Source: Norwegian Chamber of Commerce Hong Kong

11.5 Visa Requirements for Hong Kong Residents

Hong Kong residents do not require a visa to travel to Norway if the duration of stay is less than 90 days.

Source: Visa on Demand
Date last reviewed: May 14, 2019

Content provided by Picture: HKTDC Research
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