latvian construction companies doing business in … · 2014-10-02 · latvian construction...

LATVIAN CONSTRUCTION COMPANIESDOING BUSINESS IN NORWAY

RIGA, FEBRUARY 4, 2014

JENS LIENG & MARTIN WIKBORG

VISMA – The leading provider of business software and services (BPO) in the Nordic

Business Process Outsourcing(BPO)

• Accounting services• Payroll services• Financial consultancy• Online accounting services • Legal services• Staffing (accountants/economists)

One Step Ahead - One Stop Shopping

• More than 100 offices

• 5 600 employees

• Headquarter in Oslo

Construction work in Norway - topics• Legal entity in Norway

• Single contract, branch, company, partnership

• Registration in Norway

• VAT

• Corporate tax

• Books of accounts and audit

• Employees• Employee registration – ID card

• Employee taxation

• Payroll tax / social security contribution

• Employees’ rights – contract, salary level, work hours

• Use of sub-contractors


Construction work in Norway – Norwegian entities

Latvian SIA

Norwegian ASBranch office

Partnership ANS / DA /

KS / SP

Single contract / NUF

Registered branch office / NUF

AS – Private LtdASA – Public Ltd

Limitation of liability?

Partner


NUF = Norskregistrert utenlandsk foretak

Registration in NorwayNorwegian registration

• The centralized registers in Brønnøysund• The Central Coordinating Register for Legal Entities

• Norwegian organisation number “org.nr.” of 9 digits

• The Register of Business Enterprises

• The Employer Register - NAV

• The VAT-register

• The Register of Company Accounts

• The employee register (NAV)

• Central Office – Foreign Tax Affairs – COFTA• Tax registration of foreign entities & individuals – form RF-1199

VISMA may help you with all

registrations


Reporting to COFTA• Reporting to COFTA on form RF-1199

• Contract, employees and sub-contractors

• Within 14 days after work has commenced in Norway

• Upon termination of work / exit of employees

Norway co

Foreign co

Norway co

Foreign co

= liable to report

= subject to report


Tax Administration in Norway

• The Norwegian Ministry of Finance

• The Tax Directorate

• VAT and Customs Directorate

• Tax Offices (Corporate tax, individual tax, VAT)• 5 Regional Offices • Petroleum Tax Office• Tax Office - Larger Enterprises• Central Office – Foreign Tax Affairs – “COFTA”

• Regional Tax Collector Offices


Some important Norwegian Tax Rates (2014)• VAT rate: 25 % (food 15 %, transportation 8%)

• Corporate tax rate: 27 %

• Employee tax rate: Up to 39 % • Net tax rate: 27 %

• Top tax rate: 9 % > NOK 527 400

• Additional top tax: 3 % > NOK 857 300

• Social security contribution• Employer contribution rate: 14.1% (reduced in certain zones)

• Employee contribution rate: 8.2 %


Norwegian VAT system – brief introduction• VAT shall be calculated and paid on sales of “all” good and services

• Various exemption• Construction work in Norway – always VAT-liable

• VAT is due on importation of goods

• VAT-register liability when turnover exceeds NOK 50 000 during a 12-month period

• Reverse charged mechanism on invoices from foreign non-VAT registered service providers

• VAT-registered person receives refund of input VAT• I.e. end consumer tax

• Filing of VAT-returns• Six times a year – covering two months period


Norwegian VAT system – brief introduction• Registration via Norwegian based VAT-representative

• Foreign businesses that establish a business activity in Norway without having a “place of business” in Norway must register through a Norwegian VAT-representative

• As from July 1, 2013 rules are eased for companies from Belgium, Denmark, Finland, France, Iceland, Italy, the Netherlands, Poland, Portugal, Slovenia, Spain, Sweden, Great Britain, Czech Republic and Malta, but not for Latvian entities• I.e. Single contract / NUF in Norway requires VAT-rep

• VAT-rep procedures, e.g.• Invoices via VAT-rep• VAT-rep keeps VAT books of accounts• VAT-rep files VAT returns

VISMA may be your VAT-representative


Norwegian taxation – brief introduction• Norwegian Tax Act

• Low threshold for corporate tax liability for non-Norwegian entities• “Business activities performed in Norway”• One day of activity is sufficient

• Norwegian tax treaties• Tax treaties can only give relief from Norwegian tax liability – avoid double taxation

• Around 90 tax treaties - Based on OECD model tax convention

• Tax treaty of July 19, 1993 with Latvia

• Construction project - Permanent Establish if last for 6 months

• Norwegian corporate tax base• Main rule – does not follow the accounting principles for timing of income

• Completed contract method when turnkey contract

• Norwegian corporate tax return• Due date end March (paper), and end May (electronically)


Let VISMA do your

tax return

Corporate tax issues and payments from Norway• Transfer pricing – Issue no 1 – heavy focus from tax office• Payments must be arm’s length based

• Norwegian withholding tax (WHT) regime• Interest – no WHT

• Royalty – no WHT

• Technical / managerial fees – no WHT

• Dividends• Main rule 25 % dividend WHT,

• But no dividend WHT if corporate shareholder really established in the EEA

• Dividend WHT rate also reduced in tax treaties – commonly to 15 %


VISMAhas

severalqualified

and experienced

taxlawyers

Books of accounts etc. – brief introduction• Duty to keep books of accounts

• All Norwegian companies

• Non-Norwegian companies that are tax liable according to the Norwegian Tax Act

• Audit of books of accounts• Independent appointed auditor required if

turnover exceeds NOK 5 million

• Filing of Annual Accounts - provided duty to keep books of accounts • Annual accounts with director report (and audit

report) must be filed within end July• Fines for non compliance

VISMA is the largest

accounting bureau in

Norway


Doing business in Norway

Latvian cross border activities to Norway – typical set ups

• Sale of goods to Norway

• Establishing sales representative in Norway

1. Single construction project in Norway2. Branch in Norway3. Subsidiary in Norway4. Employees in Norway


1 Single construction project in Norway

Registration Yes, as a NUF in Coordinating Register and Business Enterprise Register

VAT Yes, via VAT-rep if no fixed place of business

Corporate tax Yes, however only provided project last for more than 6 months

Employee tax Yes, if corporate tax. And yes if no corporate tax but stay last for more than 183 days

Payroll tax Yes, but not if employee holds E-101 / A-1

Books of accounts Yes

Audit Yes, if turnover exceeds NOK 5 million


2 Branch in Norway

Registration Yes, as a “NUF” in Coordinating Register and Business Enterprise Register

VAT Yes, although certain “in house” services does not qualify

Corporate tax Yes, provided “Permanent establishment”, i.e. fixed place of business or construction project last for more than 6 months

Employee tax Yes, if corporate tax. And yes if no corporate tax but stay last for more than 183 days





3 Norwegian subsidiary• Limited liability company “AS” (private) or “ASA” (public)

• Minimum share capital for AS is NOK 30 000

• AS is tax resident in Norway provided effective management on board level conducted in Norway

Registration Yes

VAT Yes

Corporate tax Yes

Employee tax Yes





4 Compliance – Latvian employees in Norway• Reporting to COFTA – RF-1199, to obtain

• Norwegian D-number (social security number)

• Salary withholding tax (WHT) card

• Salary WHT bank account

• WHT on each payment of salary

• Bi-monthly reports and payment to tax collector

• End of year salary report (lønns- og trekkoppgave)

• Construction workers must carry ID card, see next slide

• Note that compliance obligations exist independent of final tax liability, and fines may be imposed for non-compliance

VISMA may be your Norwegian

payroll agent


4 ID card for construction workers• All employees that works on a building or

construction site must carry an ID card• Applies to Norwegian and non-Norwegian workers• Required in order to get access to construction site

• Also short-term assignments• The employer is responsible to order• Order, forms and info on www.byggekort.no• Two steps for ordering

• Employer registers as a card-orderer• Upon receipt as card-orderer ID, you may order ID cards

• Must have • D-number• Photo• Copy of passport

• Valid for two years


4 Taxation - Latvian employees in Norway• Any employees that works in Norway is subject to Norwegian tax according to Norwegian Tax Act

• This is also the main rule according in the tax treaty• I.e. remuneration for work provided in Norway is taxable to Norway, always if:

• The employer is Norwegian, or• The employer is foreign and has a permanent establishment in Norway, or• The employee is hired out to an employer who is taxable in Norway

• If none of the three situations are fulfilled then the employee is exempted from Norwegian tax provided the stay in Norway lasts for less than 183 days during a 12 months period

• Individual tax return• Filing duty may exist even though finally tax exempted according to tax treaty

• Due date end of April


4 Contract on seconding employees to Norway• Hired out employee contract vs. genuine contract

• Own risk and responsibility for the products

• Instruction rights, ownership to tools, paid byhour or lump sum etc.

Genuine contract Hired out employee

Registration Yes Yes

VAT Yes (no) No

Corporate tax Yes / no No

Individual tax Yes / no Yes

Books of accounts Yes No

Audit Yes / no No

VISMA has dedicated experts on contract law


4 Employees in Norway – Social security• Any employees that works in Norway is covered by the Norwegian national social security system according to Act

• Consequently the employee and the employer must pay social security contribution • Rates: 8.2 % and 14.1 % respectively

• However exemption may be granted according to EEA-regulation– e.g. on temporary stay in Norway• Form A-1 (former E-101) must be issued by

Latvian social security authorities


4 Employees in Norway - Rights• Norwegian Employee Protection Act gives a wide range of benefits / rights to the employee, e.g. on main rules:• Written employment contract

• Rules re safe working site• Injuries must be reported

• Vacation • Right to 25 working days (i.e. 4 weeks and one day) per year• Vacation payment - 10.2 % (or 12 %) on prior year’s earnings

• Mandatory private pension plan

• Mandatory injury insurance protection

• Minimum salary regulation in construction industry• Regulations based on agreement with union

• Skilled workers – NOK 174.10 per hour• Unskilled workers – NOK 156.60 (but NOK 163.20 if more than one year experience)• Workers under 18 years of age – NOK 105.10

VISMA has dedicated experts on

employment law


4 Employees in Norway – working hours• Normal working hours (main rules) - no more than

• 9 hours per 24 hours• 40 hours per seven days

• Maximum extra hours - no more than• Basic rules:

• 10 hours per seven days,• 25 hours in a four weeks period, or• 200 hours in a 52 weeks period

• If employment contract based on agreement with union• 15 hours per seven days,• 40 hours in a four weeks period, or• 300 hours in a 52 weeks period

• Upon application to the Norwegian Labour Inspection Authority• 20 hours per seven days, and• 200 hours in a 26 weeks period


5 The use of sub-contractors• Reporting requirements, ref form RF-1199, see slide 5

• Failure to report may imply• Penalties for non-compliance or late filing• Liability to pay tax, etc. related to sub-contactor and/ or employees of subcontractor

• Latvian company may be deemed subject to Norwegian tax solely due to work performed in Norway by sub-contractors


VISMA• VISMA is the largest accounting firm in Norway with 1 000 professionals

• VISMA Advokater is a fully fledged law firm with 22 lawyers

• We may assist in planning, consulting, compliance, disputes and litigation• Company law and registration in Norway

• Accounting

• Payroll agent

• Company secretary

• Tax and VAT, including VAT-representive

• Contract law

• Employment law

• One point of contact: [email protected] + 47 98 20 62 42

VISMA provides “One stop shopping” for your compliance needs


Thank you for your attention !

[email protected] +47 98 20 62 42

Visma Advokater AS


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latvian construction companies doing business in … · 2014-10-02 · latvian construction...

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