Brexit - Impact on corporate tax

Deloitte Advokatfirma

The Brexit transition period ends on 31st of December 2020, and this will have consequences on the corporate taxation of cross-border activities between Norway and the UK. We have highlighted some key points your company must bring attention to now.

Published 08.12.2020

Brexit is approaching the end of the transition period, and from 1st of January 2021, the UK will – in all probability – no longer be treated as if it were a member of the EEA. This will have vast consequences on the corporate taxation of cross-border activities between Norway and the UK. For instance, the Norwegian participation exemption will become more limited for Norwegian companies with investments in the UK as a third country. Furthermore, British shareholders in Norwegian companies will no longer be entitled to the Norwegian participation exemption. Below you will find five action points that should be considered by companies with cross-border activities between Norway and the UK, prior to year-end.

Key points your company must bring attention to now
  • Provided that no transitional rules are introduced last minute, a Norwegian company with capital losses on portfolio investments (shareholdings that do not meet a 10 % threshold) in a British company, should await disposal until 2021. 
  • Conversely, a sale of portfolio investments that will result in a capital gain should be carried out before year-end. 
  • Alternatively, such shares should be considered to be transferred to a fund account in which the account owner invests through a capital insurance policy. Read more here. 
  • To avoid being forced to withdraw from the Tonnage Tax Scheme, Norwegian companies with ships registered in the UK (or a British-controlled territory such as Gibraltar) should consider the possibility to re-flag such ships to other territories. 
  • Currently, UK has a CIT rate at 19 % and is generally not regarded a low-tax jurisdiction for Norwegian tax purposes The rate may however be reduced in the future, and incentives may be granted to certain industries. This development needs to be monitored closely, considering the vast impact it may have on the application of the Norwegian participation exemption method and possible CFC-taxation.


Read the latest insight on Brexit and how it will affect you and your business. 

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