Norway has deposited its instrument of ratification of the MLI with the OECD 

On 17 July 2019, Norway deposited its instrument of ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (‘MLI’) with the OECD. The MLI seeks to swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. It is expected that the MLI shall enter into force with respect to Norway on 1 November 2019, which is the first day of the month following the expiration of a period of three calendar months beginning on the date of the deposit by Norway of its instrument of ratification. As from this date, Norway's treaties with Australia, Georgia, India, Ireland, Japan, Lithuania, Luxembourg, Malta, Netherlands, Poland, Russia, Serbia, Slovenia and the United Kingdom will be affected by the MLI. This list of affected treaties will increase as further partner countries deposit their instruments of ratification.

Pursuant to Article 7(17)(a) of the MLI, Norway have stated that while Norway accepts the application of the Principle Purpose Test alone as an interim measure, it intends where possible to adopt a limitation on benefits provision, in addition to or in replacement of Article 7(1) of the MLI, through bilateral negotiation.

The provisions of the MLI concerning WHT shall become effective as of 1 January 2020 to the extent that Contracting Jurisdictions have deposited their instruments of ratification of the MLI with the OECD prior to 1 October 2019. Japan as a contracting jurisdiction deposited its instrument of ratification of the MLI with the OECD on 26 September 2018. Therefore lease payments by Japanese airlines to Norwegian leasing vehicles may be impacted from 1 January 2020.

Please do not hesitate to contact us should you wish to discuss this development or any other international tax changes that may impact your leasing structures. 

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