5. Business Presence Issues
a. How the Use of One or More Independent Contractors Creates a Permanent Establishment in Country and the Ramifications
If a company or self-employed individual is resident in a country that has entered into a tax treaty with Norway, Norwegian taxation of business income generally requires that the income is derived from business activities carried out through a permanent establishment in Norway.
A “permanent establishment” refers to a fixed place of business through which a company or self-employed individual carries out its business activities, either wholly or in part. In addition, the activity must have a sufficient degree of permanence or duration. Examples of permanent establishments are:
- a place of management a branch
- an office
- a factory
- a workshop, and
A building site or a construction, installation or assembly project, or activities consisting of planning, supervising, consulting or other auxiliary work by personnel connected with such a project, constitutes a permanent establishment only if the project lasts more than 12 months and is carried out in the same place.
When a person is acting in another Nordic country on behalf of an enterprise and he has, and habitually exercises, an authority to conclude contracts in the name of the enterprise, the enterprise shall be deemed to have a permanent establishment, so-called dependent agent. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
b. How the Employment of One or More Individuals Creates a Permanent Establishment in Country and the Ramifications
In Norway, “permanent establishment” as a kind of “permanent work place” is defined as “the place where you normally perform your work tasks”.
