Group contributions – can a profit in one company cover a loss in another?
Yes, provided the companies are in the same tax group. A group contribution gives the giver a deduction and the recipient taxable income, so that a loss can be used now instead of waiting for a future profit. But the parent has to own more than 90% of the shares and votes, the group relationship has to be in place at year end, and the contribution also has to be lawful under the Companies Act.
What is a group contribution?
A group contribution (konsernbidrag) is a transfer of economic value without consideration between companies in the same qualifying group. It can be money, assets or other economic value. The tax rules do not necessarily require the cash to move physically in the same year – it can be enough that the giver takes on a real and unconditional obligation to the recipient. Group contributions are used above all to move taxable income between group companies. That is different from a dividend, which moves capital without moving the tax position.
A simple calculation
Assume the structure Holding AS → Subsidiary 1 AS and Subsidiary 2 AS, both wholly owned within the same group. Subsidiary 1 has a taxable profit of NOK 2,000,000. Subsidiary 2 has a tax loss of NOK 1,000,000. Without a group contribution, Subsidiary 1 pays 2,000,000 × 22% = NOK 440,000 in tax, while the loss in Subsidiary 2 sits waiting. If Subsidiary 1 instead gives a group contribution of one million to Subsidiary 2, Subsidiary 1's taxable income becomes NOK 1,000,000 and its tax NOK 220,000. Subsidiary 2 receives one million as a taxable group contribution, but it is set against the loss so that taxable income is nil. The group's tax payable is therefore NOK 220,000 instead of 440,000.
You have to own more than 90%
For limited companies, the parent has to own more than 90% of the shares and hold more than 90% of the votes that can be cast at the general meeting for the companies to form a tax group under the group contribution rules. Exactly 90% is not enough. That is the same threshold as for the group exemption from the three-per-cent rule in the participation exemption. Group contributions can also be made between sister companies where the group requirements are met through the common parent.
When does the 90% requirement have to be met?
The group relationship must as a general rule be in place at the end of the income year the contribution is to take effect for. That means a company can join the group during the year and still meet the requirement at year end. If you acquire a company in October, a group contribution for the whole year can be available.
The giver cannot create a new tax loss
A deductible group contribution is limited to the giver's otherwise taxable general income. Where the giver has carried-forward losses from earlier years, those have to be deducted before calculating how much group contribution can be deducted. The part exceeding the giver's general income gives no deduction to the giver and is not taxable for the recipient under the general rule. That is usually described as a group contribution without tax effect.
What happens at the recipient?
The part of the contribution the giver deducts becomes taxable income for the recipient in the same income year. The recipient can use the current year's loss and earlier carried-forward losses against the contribution received. So establish how much loss the recipient can actually use before fixing the amount.
The contribution is often decided after the year end
An ordinary group contribution for 2026 does not have to be resolved by 31 December 2026. The general meeting normally resolves the ordinary group contribution in 2027, when it deals with the annual accounts. Even so, the contribution takes tax effect for the 2026 income year for both giver and recipient. That lets the group see the final tax figures before fixing the amount – a practical advantage that is often overlooked. A group contribution can also be resolved on the basis of an interim balance sheet. That balance sheet has to meet the statutory requirements and cannot have a balance sheet date more than six months before the resolution.
It also has to be lawful under the Companies Act
The tax rules are only half the picture. To get the deduction, the contribution also has to be lawful under the Companies Act. Section 8-5 largely applies the dividend rules correspondingly. The sum of dividends and group contributions cannot exceed what the company can lawfully distribute, and the company must still have adequate equity and liquidity after the distribution. Where a parent gives a contribution to a subsidiary, the payment can at the same time increase the value of the parent's shares in the subsidiary. The direction of the contribution can therefore affect how much has to sit within free equity.
A group contribution is not the same as a dividend
An ordinary dividend gives the paying company no deduction. A group contribution, by contrast, can give the giver a deduction and the recipient corresponding taxable income. The Taxation Act says expressly that a group contribution is not treated as a dividend under the shareholder taxation rules. That difference is what makes the group contribution a profit tool and the dividend a capital tool.
A foreign parent is not in itself an obstacle
Where a Swedish or other foreign parent owns two Norwegian subsidiaries and the ownership and voting requirements are met, the Norwegian companies can still make group contributions between themselves. The other direction is far stricter. Section 10-5 of the Taxation Act gives a narrow exception for a contribution to an EEA subsidiary with a final loss. The conditions include genuine establishment, genuine economic activity, more than 90% ownership and votes, the business having ceased, and strict liquidation conditions. This is a special exception – not an ordinary way of moving losses between Norway and abroad. The requirement of genuine establishment in the EEA is the same as in several other tax rules.
Be careful buying companies with old losses
Section 13-3 of the Taxation Act can cause carried-forward losses to fall away where exploiting the tax position was the predominant motive for the transaction. The Supreme Court dealt with this in the Armada judgment, HR-2017-2410-A. Buying an empty company for the sake of its loss is therefore rarely a durable plan.
The checklist before the contribution is resolved
For an ordinary Norwegian group the main idea is simple: a profit in one company + a loss in another = consider a group contribution. Before resolving it, check whether the holding and the voting rights are above 90%, whether the group relationship was in place at year end, how large the giver's taxable income is after its own carried-forward losses, how much loss the recipient can actually use, and whether the giver has lawful distributable capacity. Greenleaf can calculate the tax effect, check the loss positions and group conditions, calculate the lawful distributable limit and handle the accounting and tax reporting of the contribution.
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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?
- 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?
- CFC rules (NOKUS) – when are Norwegian owners taxed before the money comes out?
- 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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