A foreign company's activities in Norway may qualify as a permanent establishment — for example, by setting up an office, or through a construction or installation project lasting more than twelve months. This triggers Norwegian corporate tax liability, currently 22%, on the profits generated by the establishment. However, it isn't always clear whether your activities actually qualify — which is why this article walks through the 3 grey areas that most often cause uncertainty around the twelve-month test: when the clock starts, whether interruptions count, and when the clock stops, along with the corporate tax obligations that follow once a permanent establishment is confirmed.
In many cases, a foreign company's activities in Norway qualify as a permanent establishment. This can occur if the company:
Sets up an office in Norway, or
Participates in a construction or installation project lasting more than twelve months
Generally, Norway can only tax the business profits of a foreign company that has a permanent establishment in the country. For this reason, the concept of a permanent establishment is frequently discussed among Norwegian tax advisors.
Also read: What is considered permanent establishment in Norway
A foreign company with a permanent establishment in Norway is covered by Norway's tax treaties with roughly 90 countries. Under these treaties, the company must pay Norwegian corporate tax — 22% — on the profits generated by the permanent establishment.
Also read: Corporate tax in Norway: Get the basics for foreign companies
It may not always be obvious whether a foreign company’s Norwegian operations qualify as a permanent establishment. Based on experience, we see three grey areas that often cause uncertainty, especially regarding the “twelve-month test” used for construction and installation projects.
| Grey area | Key question | Generally counts toward the 12 months? |
| Project start date | Do preparatory activities count? | Only if they approach project management or occur immediately before construction |
| Project interruptions | Do weather delays or other pauses count? | Yes — seasonal and temporary interruptions are included |
| Project termination date | When does the clock stop? | At completion or abandonment, including cleanup — but not time spent away from the site |
Questions often arise about whether preparatory activities—such as sales meetings, business discussions, or on-site inspections—count toward the twelve-month period.
According to OECD commentary, a site is generally considered to exist from the date the contractor begins work in the country, including preparatory work such as setting up a planning office for the construction.
From our point of view:
Short business meetings and formalities, like attending an ID check at the tax office, generally do not start the clock.
Activities that approach project management or occur immediately before construction may be included.
It is advisable to document all preparatory activities, showing their nature and duration, to provide clarity if questioned by Norwegian tax authorities.
Unexpected interruptions are common in construction projects in Norway, often due to harsh weather.
OECD commentary notes that seasonal or other temporary interruptions, including those caused by bad weather, should be included when determining the life of a site.
For example: a construction project is planned to last eight months starting May 2025 in Northern Norway. Work stops in September 2025 due to weather and resumes the following May, finishing in July 2026. Even though the actual work totals eight months, including the interruption pushes the project beyond 12 months, creating a permanent establishment.
In some cases, the interruption may be considered a "permanent abandonment" of the site, especially if the foreign company only performs short, separate operations before returning home. Companies should plan and track interruptions carefully, particularly in areas with harsh weather.
According to OECD guidance, the site continues to exist until the work is completed or permanently abandoned.
This includes:
However, time spent away from the site packing gear should not be counted toward the twelve-month test.
Testing or commissioning the installation is included in the twelve-month calculation. Knowing the exact start and end dates of a project is essential for planning and compliance.
Understanding the concept of a permanent establishment and its grey areas is crucial before starting a business in Norway. Proper planning and careful documentation help prevent unexpected tax liabilities and ensure smoother operations.
We know what it takes to do business in Norway, from planning to execution and finally ending the project. If you have any questions, do not hesitate to contact us.