CFC rules (NOKUS) – when are Norwegian owners taxed before the money comes out?
Norway's CFC rules bite where a company is Norwegian-controlled and resident in a low-tax jurisdiction. The Norwegian owners can then be taxed every year on their share of the profit, even though the money stays in the company's foreign account. A tax treaty can shelter companies with mainly active income, and within the EEA there is an exception for companies that are genuinely established.
What does NOKUS mean?
NOKUS stands for Norwegian-controlled foreign company in a low-tax jurisdiction. The rules are in sections 10-60 to 10-68 of the Taxation Act. The purpose is to stop Norwegian taxpayers moving capital or income to a low-tax jurisdiction and deferring Norwegian tax indefinitely simply by leaving the money in the foreign company. In practice NOKUS is a form of partner taxation: the company's taxable result is calculated under Norwegian rules, but it is the Norwegian owners who are taxed on their shares.
Three main questions decide whether NOKUS applies
1. Is this a separate foreign company or another qualifying arrangement? 2. Is the company resident in a low-tax jurisdiction? 3. Is the company Norwegian-controlled? If those conditions are met, you then have to check whether a treaty exception or the EEA exception prevents CFC taxation.
Norwegian control means more than who is in the share register
The general rule is that at least 50% of the company has to be controlled by Norwegian taxpayers both at the start and at the end of the income year. But the control rules have several safety valves: more than 60% Norwegian control at year end gives Norwegian control regardless of the starting position, under 40% at year end means the company is not Norwegian-controlled, and between 40 and 60% there are carry-forward rules from earlier years. Control can also follow from voting rights, agreements, powers of attorney and other real influence.
Several Norwegian owners are added together
It is the combined Norwegian control that counts. If Norwegian owner A holds 30% and Norwegian owner B holds 25%, combined Norwegian control can be 55% even though the owners are unrelated and do not cooperate. You can therefore end up inside the CFC rules having done nothing more than invest alongside another Norwegian.
Indirect ownership counts too
You do not have to own the low-tax company directly. Control can be calculated through intermediate companies. But the control test has to be kept apart from how large a share of the profit each owner is actually taxed on. An indirect 50% holding through a company that in turn owns 50% gives an economic profit share of 25%.
What actually is a low-tax jurisdiction?
The Taxation Act defines a low-tax jurisdiction by whether the tax is less than two thirds of what an equivalent company would be charged in Norway. Norwegian corporation tax is 22% in 2026. It is therefore tempting to say anything below 14.67% is a low-tax jurisdiction. The rule is not that simple – effective tax, the tax base, the company type, the sector and the regulatory lists all have to be considered. The Directorate of Taxes' regulation has both a list of countries to be treated as low-tax jurisdictions and a list of countries that are not. The lists are updated annually, so an old «blacklist» found online is no answer.
The Supreme Court clarified the low-tax test in 2025
In HR-2025-563-A – Elopak – the Supreme Court held that the assessment is general and adapted to the company type and the sector. Atypical individual choices to pay more tax than necessary do not on their own decide whether the country is a low-tax jurisdiction for that type of business. The judgment shows why it is not enough to ask: «how much tax did our company pay last year?»
What happens when the rules apply?
The foreign accounts have to be restated into a taxable result under Norwegian tax rules. The result is then allocated to the Norwegian participants. If the CFC has a taxable profit under Norwegian rules of NOK 1,000,000 and you own 60% of the result, your CFC income is NOK 600,000. At 22% tax on general income the tax is NOK 132,000. You can therefore face Norwegian tax without having received a single krone of dividend. That is why CFC taxation surprises people: the tax arrives, the cash does not.
Foreign tax can reduce the Norwegian tax
Norwegian participants can on certain conditions claim credit relief for their proportionate share of qualifying foreign tax the CFC has paid. Where the CFC makes a loss, the loss cannot be set directly against other Norwegian income. It is carried forward and can be used against later profits from the same CFC.
Is the money taxed again when it is distributed?
For a Norwegian company owning the CFC, a distribution within previously CFC-taxed income is as a general rule shielded from further tax under section 10-67. For a personal owner the system is different. The dividend does not automatically become tax-free simply because the profit was CFC-taxed earlier. There are also separate rules to prevent double taxation of previously CFC-taxed retained income when the shares are later sold – and there too the treatment differs between corporate and personal owners. The CFC result is calculated under Norwegian tax rules, and the participation exemption can matter for qualifying share income in the company.
A tax treaty can shelter active companies
Where Norway has a tax treaty with the home state, CFC taxation is applied only where the company's income is mainly passive. Skatteetaten reads «mainly» as at least 50%. Typical passive income is interest, dividends and portfolio investment. A company genuinely carrying on business in a treaty country is therefore in a very different position from a pure asset management vehicle.
The EEA has its own exception
Where the company is resident in the EEA, CFC taxation is not to be applied where the Norwegian participant documents that the company is genuinely established and carries on genuine economic activity. Note where the burden lies: it is the participant who has to document this. What is required is set out in Genuinely established in the EEA – what the substance test means in practice
CFC does not apply if the company is really Norwegian
Where the foreign company in reality has effective management in Norway, it is as a starting point not a foreign CFC but directly taxable in Norway on worldwide income. The two rules solve different problems, and which one applies matters.
How CFC income is reported in 2026
The forms RF-1245 and RF-1246 were used up to and including the 2022 income year and were withdrawn from 2023. Online guides that still refer to them are out of date. The Norwegian participants are jointly responsible for filing a company return and business specification for the CFC company, which needs its own Norwegian registration number. Each Norwegian participant also reports their share of the result and the wealth in their own tax return. The deadline is 31 May. More on the annual reporting is in Do you own a foreign company? How to report it correctly
The most important question comes before the company is formed
If you are considering a foreign company, do not start with «what is the corporate tax rate in country X?» Start instead with: is the company a separate taxable person? Is the country a low-tax jurisdiction under the Norwegian test? How large will combined Norwegian control be? Does Norway have a treaty with the country? Is the income active or passive? Is the company in the EEA, and is the establishment genuine? And where will the company actually be run from? We can review the ownership structure, restate the accounts under Norwegian tax rules, calculate the CFC result and handle the Norwegian company return and the participants' reporting. The assessment of low-tax status, the EEA exception, tax treaties and more complicated international ownership structures should be reviewed with an international tax adviser where needed.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
More on holding companies, structure and cross-border
- A holding company – when does it pay off, and when does it not?
- The participation exemption – when is a company exempt from tax on dividends and share gains?
- Can I put a holding company above an AS I already own?
- Group contributions – can a profit in one company cover a loss in another?
- Mergers and demergers – when is a reorganisation worth the work?
- A holding company abroad – what do Norwegian tax rules require?
- Effective management – when does a foreign company become taxable in Norway?
- Genuinely established in the EEA – what does the substance test mean in practice?
- Do you own a foreign company? How to report it correctly
- Exit tax – what happens to your shares when you leave Norway?
- A foreign company setting up in Norway – what has to be in place?
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