Sole proprietorships, businesses assessed as a partnership, co-operatives and NUFs (Norwegian-registered foreign companies) which carry on activity in the sense of the Tax Act may, subject to certain rules, be converted to a private limited company tax-free. The conditions for tax conversion include a requirement for the limited company to be newly established, the limited company to take over the assets and liabilities of the existing enterprise and the enterprise that is converted not to be closed down or cease operating before the conversion.
In order for the conversion to be tax-free, it is a condition that the enterprise is established and notification is sent to the Register of Business Enterprises during the period 1 January to 1 July of the taxation period and that tax deductions are made and employer's National Insurance contributions are calculated by no later than from 1 July. A continuity of ownership is required, i.e. the conversion cannot lead to a change of ownership of the company. Therefore, you cannot bring in new owners when converting a sole proprietorship into a limited company.
When an enterprise is converted for tax purposes, the newly established limited company must be registered as a new enterprise and will be assigned a new organisation number. All agreements which the old enterprise has with customers, suppliers and other business contacts will therefore generally have to be renegotiated.
If the enterprise continues to operate as a new private limited company with no changes, you can apply to continue any VAT registration which already exists. You will then not have to wait to register for VAT until the enterprise's turnover has exceeded the threshold of NOK 50,000 over a 12-month period.
Documentation verifying that the company has been notified to the Register of Business Enterprises must be enclosed with the tax return for wealth and income tax.
The rules for tax conversion are laid down in the Tax Act and the Tax Regulation.