Tax for co-operatives
A co-operative (SA) is a separate legal entity. This means that the enterprise itself is responsible for reporting and paying tax. Members (owners) pay tax on what they take out in salary.
You can also be taxed on what you receive as 'back payments' When all or part of the surplus is distributed between the members based on their turnover with the enterprise, this is known as a 'back payment' from the enterprise if the back payments can be linked to the member's income-generating activity. Pre-guaranteed dividends on purchases/discounts from consumer co-operatives will not be taxable for private members.
Tax on profits must be calculated at the rate of 22%. However, the tax, which is known as 'advance tax', does not have to be paid until the year after that in which the profit was earned.
In order for newly established enterprises to have their tax calculated, form 'RF-1097 Søknad om endring av eller krav om forskuddsskatt - upersonlig skattyter' (Application for new or changed advance tax - non-personal taxpayer - in Norwegian only) must be completed and submitted via Altinn. If you wish to alter your advance tax, e.g. because of changes in your income, the same form must be used. In the case of enterprises which have previously submitted a tax return, the advance tax will be calculated on the basis of the most recent assessment.
Deductions for back payments
In the articles of association, it can be stipulated that all or part of the surplus can be distributed between the members based on their turnover with the enterprise ('back payments'). The following co-operatives can claim deductions from their income for such back payments to their members:
- Consumer enterprises with a fixed sales outlet, when more than half of regular sales are made to the enterprise's members.
- Procurement enterprises which distribute pre-ordered goods amongst their members.
- Enterprises that exclusively or primarily purchase raw materials or fixed assets for use in agriculture, forestry or fisheries, purchase products from the members' agricultural, forestry or fisheries enterprises or refine products from their members' agricultural or fisheries enterprises.
The conditions for being entitled to such deductions are that:
- the articles of associate permit back payments,
- the recipients are members,
- there is an accounting surplus during the year, and
- distributions are based on the member's turnover with the enterprise
Tax must be paid in two equal instalments during the first six months after the income year. The deadlines for these instalments are 15 February and 15 April.
If the amount of tax that has been paid is expected to be too low relative to your income, with the result that you expect to incur underpaid tax, you can pay an additional advance by 31 May.
Summaries of how much tax is to be paid are distributed by the Norwegian Tax Administration via Altinn in January. Make sure that the contact details for your enterprise are up-to-date in Altinn, so that you can receive an e-mail notification.
You will be sent a payment form with an account number and a KID number. If you wish to pay an additional advance, you must generate a KID number on the Norwegian Tax Administration's website. You will also find the account number you need to use there.
When the tax return is processed, any underpaid tax will be calculated. If any underpaid tax is outstanding, you will be sent a payment slip.
The enterprise's tax return must be submitted to the Norwegian Tax Administration via Altinn by 31 May.
Co-operatives which had no turnover during the income year or which were set up towards the end of the income year must also submit a tax return.
Co-operatives which own shares in another company
Co-operatives which own shares in another company are generally exempt from taxation on gains and dividends on shares (the exemption method). This applies within the EEA and normal tax countries outside the EEA. Losses are correspondingly not deductible.
However, there is a standard rule according to which three percent of the income which is exempt from any tax liability under the exemption method must still be considered taxable income.
The standard rule only covers dividends and distributions. Gains made on the realisation of shares are therefore not covered by the three-percent rule. Gains and dividends in group arrangements within the EEA (tax group) are also not covered, which means that no tax should be calculated on such gains.