Bookkeeping, financial statements and audits obligations for a Norwegian branch of the foreign enterprise (NUF)
This article gives a high-level overview of bookkeeping obligations, financial statement obligations and audit obligations in Norway, with particular focus on NUFs. The exact obligations depend on legal form, size, tax position and any special regulation.
This article is part of our Doing Business in Norway guide.
Bookkeeping obligation
Bookkeeping obligation means the duty to maintain accounting records in accordance with Norwegian bookkeeping rules. In practice, the business must document purchases, sales, payroll, VAT and other transactions affecting the Norwegian activity.
As a general starting point, enterprises that conduct business activities and must submit tax returns and/or VAT returns to Norwegian authorities will be subject to bookkeeping obligations. Enterprises with financial statement obligations will also normally be subject to bookkeeping obligations.
A NUF, a foreign company carrying out taxable business activity in Norway, will usually need to keep books for the Norwegian branch. The records must support Norwegian tax filings, VAT filings, employer reporting and other statutory reporting obligations.
The bookkeeping rules include requirements for documentation and storage of accounting material. Accounting material must generally be stored for five years, but certain documentation may need to be stored for longer and in some cases up to ten years. The books must be updated in time for relevant reporting deadlines. For example, a VAT-registered business submitting VAT returns every second month must keep its bookkeeping updated in line with those periods.
For NUFs, it is normally not necessary to use a Norwegian bookkeeping software. It may be sufficient to use the same system as the foreign head office or main company, provided that each transaction relating to the Norwegian branch can be clearly identified, documented and separated from other activity. The system should be able to produce reliable branch-specific reports for Norwegian tax, VAT, payroll and other reporting purposes.
Financial statement obligation
Financial statement obligation is separate from bookkeeping obligation. While bookkeeping concerns the ongoing recording and documentation of transactions, financial statement obligation concerns the duty to prepare annual financial statements. Annual financial statements will normally include at least an income statement, balance sheet and notes. Larger businesses may also need a directors’ report, cash flow statement and, in some cases, sustainability reporting.
Whether a business has a financial statement obligation depends on factors such as legal form and tax status. For NUFs, the position requires a specific assessment. A NUF may be subject to Norwegian financial statement obligations depending on the scope of the Norwegian activity and whether the branch is tax liable to Norway. Even where annual financial statements are not filed in the same way as for a Norweigan private limited liability company, the NUF still need bookkeeping records that form the basis for Norwegian tax and VAT reporting.
Foreign companies should therefore not assume that a branch registration automatically means fewer compliance obligations.
Audit obligation
Audit obligation means that the annual financial statements must be audited by an approved auditor. If audit is required, the auditor reviews the accounts and issues an audit report, which is submitted together with the annual financial statements where filing is required.
For NUFs, audit obligation is particularly important. A NUF that is taxable to Norway will generally be subject to audit if one of the relevant thresholds is exceeded: revenue above MNOK 7, balance sheet assets above MNOK 27, or an average number of employees exceeding ten full-time equivalents. NUFs subject to supervision by the Norwegian SEC may be audit liable regardless of these thresholds.
Even where annual financial statements are not subject to statutory audit, specific transactions or public support schemes may require an auditor’s confirmation. For example, certain capital contributions, grants or regulated activities may require separate auditor statements.
Practical considerations for foreign businesses
Before starting activity in Norway, foreign companies should consider:
- whether the business should operate through a NUF or incorporate a Norwegian AS;
- whether the planned activity triggers tax liability, VAT registration or employer registration in Norway;
- whether Norwegian bookkeeping routines must be established from day one;
- whether annual financial statements must be prepared and filed in Norway;
- whether the business is, or may become, subject to statutory audit; and
- whether contracts, invoicing flows and intercompany arrangements are aligned with Norwegian requirements.
These assessments should be made early. Once commercial activity has started, the business may already have filing deadlines, documentation requirements and tax reporting obligations.
Next steps
We regularly assist foreign companies, investors and individuals with establishing and operating businesses in Norway, including NUF and AS registration, bookkeeping, VAT, tax, payroll, reporting, annual accounts and communication with Norwegian authorities.
Please contact us for an informal discussion about your Norwegian establishment and ongoing compliance obligations.
