Norway is a highly developed country with a very strong and stable economy. This could be one of the reasons why you would be attracted by setting up a business there.
There are many considerations to take into account when starting a business activity in Norway. The most simple business setup for being self-employed is the sole proprietorship (enkeltpersonforetak in Norwegian). The other option would be to register a LLC (aksjeselskap or AS in Norwegian), with a minimum capital of NOK 30,000. This article will highlight the steps and requirements for setting up as sole proprietorship.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
- Commercial activity: carrying out a commercial activity is one condition to be met for registering a sole proprietorship. Commercial activity is considered to be an activity that has a certain duration and a certain extent. When does the activity become commercial?
If the activity is recurring, this would suggest that the activity could be considered commercial and, as a consequence, taxable.
The challenging part is distinguishing between activities that are characterized as a hobby and commercial activities. The legislation doesn't define the boundary between these two notions, but hobbies are not being taxed while commercial activity is taxable. This is the type of activity that defines whether you should be taxed and if you are entitled to deductions for your expenses.
Until 2017, the Norwegian Tax Administration (Skatteetaten) was the body that determined whether you are carrying out a commercial activity or not. Now, the taxpayers determine deduction entitlement themselves.
- The business address must be a real physical address in Norway and not a postbox.
- Finally, you must be at least 18 years old. Nevertheless, you can set up a sole proprietorship with the permission of your guardian and the County Governor if you are over 15 years old. You need to apply in order to receive the County Governor's approval, by choosing the "GA-8038 - Annet".
Fill in the form
If you have a Norwegian national ID number or D-number (below you have a description for the registration process if you don't have either), you must fill in the form called Coordinated register notification. You will receive a notification for signing in your Altinn inbox, which you will use in order to sign the form. The business will be then registered and you will be notified via your Inbox in Altinn.
N.B: Altinn is an internet portal for digital dialogue, private individuals, and public agencies.
If you are a foreign citizen outside an EU/EEA country and therefore don't have a Norwegian ID number or D-number, you need to apply for a residence permit in order to be allowed to work in Norway.
Name the sole proprietorship
As in many other countries, the name of your sole proprietorship must include your surname. You can choose a name that reflects the identity of your business. Nevertheless, be careful to always check if the business name you chose is available, and that is not subject to others' legal rights.
Register the sole proprietorship
The Register of Legal Entities (Brønnøy Register Centre) is a national register that allocates organization numbers to your business. Sole proprietorships are entitled to register in this Central Coordinating Register for Legal Entities, but it is not mandatory, unless the business is obligated to register for VAT (if turnover is exceeding NOK 50,000). The registration in the Register for Legal Entities is free of charge.
Also, if you intend to trade ready-made goods, and if you have more than five employees or use goods as collateral, you must register in the Register of Business Enterprises, as this is mandatory. The registration in the Register of Business Enterprises allows you to benefit from legal protection to your business's name, as well as a company certificate as a reference for lenders, registrars, tax, and customs authorities. Most of the information in the Business Register is public and is, therefore, an important source of information for those who need secure access to a company's key information. The registration fee in the Register of Business Enterprises is NOK 2,250 (USD 220) in the case of electronic registration or NOK 2,832 (USD 245) in the case of registration using a paper form.
Duties and Responsibilities
Bear in mind that, even though setting up a sole proprietorship is pretty easy, this comes with high responsibilities.
The biggest one is that you will be liable for all the debts. As the owner, you will be personally liable for your proprietorship's finances and obligations.