Norway Issues Draft Amendments to Implement the OECD Side-by-Side Tax Package

On June 4, 2026, the Norwegian Ministry of Finance published a consultation paper proposing amendments to the Norwegian Supplementary Tax Act, and its regulations. The consultation deadline is 3 August 2026. The proposal is to implement the OECD January 2026 ‘Side-by-Side’package, together with later May 2026 OECD guidance on the Transitional UTPR Safe Harbour for 52/53-week fiscal years.

 The draft amendments are proposed mainly from income year 2026, for fiscal years beginning after 31 December 2025, with a narrower retroactive change to the Transitional UTPR Safe Harbour from income year 2025.

Key changes in the draft law include:

A new chapter 8 for Safe Harbours

Existing Norwegian Safe Harbours are currently centred around section 5-7 of the Supplementary Tax Act and regulatory provisions. The Ministry proposes to repeal section 5-7 and replace it with a new chapter 8 dedicated to Safe Harbour rules. The proposal would include a general Safe Harbour provision in new section 8-1 and specific delegation provisions for individual Safe Harbours, including the Simplified ETR Safe Harbour, QDMTT Safe Harbour, Side-by-Side Safe Harbour, UPE Safe Harbour, Substance-based Tax Incentive Safe Harbour, Simplified Calculation Safe Harbour and CbCR Safe Harbour.

The Ministry’s rationale is that the Safe Harbour rules have expanded substantially and should be made more accessible through a clearer statutory structure.

The proposed new section 8-1 would describe Safe Harbours as elective rules that allow the reporting constituent entity to set top-up tax to zero where the relevant conditions are met. For the Substance-based Tax Incentive Safe Harbour, the effect is narrower: top-up tax is reduced or eliminated only to the extent attributable to qualified tax incentives.

The restructuring would also require consequential amendments to the Tax Administration Act and Tax Payment Act.

Extension of the Transitional CbCR Safe Harbour

Norway already has a Transitional CbCR Safe Harbour. The draft law proposes to  extend it by one year, following the OECD’s January 2026 package. Under the current Norwegian rules described in the consultation paper, the CbCR Safe Harbour applies to fiscal years beginning no later than 31 December 2026 and ending no later than 30 June 2028. The proposal would extend that to fiscal years beginning no later than 31 December 2027 and ending no later than 30 June 2029.

For fiscal years beginning in 2027, the transitional rate would remain 17%.

The new Simplified ETR Safe Harbour

Whilst other jurisdictions that have implemented (or have issued draft law to implement the Side-by-Side Tax Package) typically exclude the Simplified ETR Safe Harbour (with future draft law to be issued to implement it), Norway does not take this approach. The Draft Law includes provisions to implement it.

The Ministry describes this as a response to the disproportionate burden of full GloBE calculations in jurisdictions that are expected to present low top-up tax risk because of a high statutory corporate tax rate and broad tax base. The Safe Harbour is intended to let groups demonstrate low risk through a simplified calculation rather than a full jurisdictional Pillar Two computation.

Under the draft, the top-up tax for IIR, UTPR and Norwegian domestic top-up tax purposes would be set to zero for a tested jurisdiction if the simplified ETR is at least 15%, or if the jurisdiction has a simplified loss. The simplified ETR is calculated as simplified tax divided by simplified result.

The Safe Harbour uses financial accounting data, generally aggregated at tested-jurisdiction level, and requires specified adjustments. The consultation paper explains that the simplified approach involves fewer and more optional adjustments than the full GloBE rules, and that it may rely on aggregated consolidated financial statement data rather than entity-by-entity calculations, provided the group’s systems can allocate income and taxes to tested jurisdictions consistently.

Accounting data and tested jurisdictions

The draft rules would allow figures from the consolidated financial accounts to be used where the group’s systems can allocate result and tax to the relevant tested jurisdictions on a consistent basis. Where a QDMTT requires use of a local financial accounting standard, the Simplified ETR Safe Harbour may also require that local standard. If the group elects to use the consolidated financial statement accounting standard across jurisdictions where this is allowed, the standard must be used consistently in subsequent years.

Simplified result

The simplified result starts from pre-tax financial accounting profit or loss, subject to mandatory, sector-specific, conditional and elective adjustments. Mandatory adjustments include excluded dividends, excluded equity gains and losses, and disallowed expenses. The consultation paper notes a simplified threshold for fines and penalties: under the Simplified ETR Safe Harbour, the relevant threshold would be EUR 250,000 rather than the EUR 50,000 threshold used in the full calculation.

Sector adjustments are proposed for banking, insurance, international shipping and ancillary activities. Conditional adjustments include revaluation gains and losses, prior-period errors and accounting-policy changes, with special treatment where relevant income has been taxed at at least 15% and related tax is booked to equity or other comprehensive income.

Simplified taxes

Simplified taxes would broadly comprise current tax and deferred tax included in the aggregated accounting result, plus certain deferred tax booked at consolidation level relating to the relevant entities. Deferred tax expense included in simplified tax must generally be recalculated at 15% where it is booked at a higher rate.

The draft includes an adjustment for negative tax expense. Where there is a simplified loss and simplified tax is negative, or lower than 15% of the loss, the difference is carried forward under rules analogous to the treatment of excess negative tax expense. The proposal also contains an alternative five-year transitional method involving adjustments for deferred tax assets, permanent differences and certain goodwill or indefinite-life intangible deferred tax liabilities.

There are also one-year elections affecting simplified tax, including treatment of covered tax expense included in pre-tax profit, taxes booked to equity or other comprehensive income, qualified refundable and marketable tax credits, use of the Substance-based Tax Incentive Safe Harbour in conjunction with the Simplified ETR Safe Harbour, and the GloBE loss election.

Post-year-end adjustments, tax allocations and transfer pricing

The draft provides specific rules for post-year-end adjustments. As a general matter, adjustments are picked up when booked, but an election may allow certain adjustments made within 12 months to be assigned back to the transaction year, subject to limits for tax reductions.

The proposal is more restrictive than the full rules in allocating taxes paid by owners. As a default, owner-level taxes are generally not allocated to the entity under the Simplified ETR Safe Harbour, including parent-to-CFC and head-office-to-permanent-establishment allocations, with a limited exception for source withholding tax on distributions. A five-year election would allow such taxes to be allocated under ordinary principles, and there is also a one-year simplification for permanent establishments.

Cross-border related-party transactions must be adjusted in accordance with the arm’s length principle, with modifications. Tax adjustments booked within 12 months may be reflected, and a five-year election may assign certain effects to the transaction year. 

Exclusions, entry and re-entry

The Simplified ETR Safe Harbour would not be available for certain categories, including stateless entities, tested jurisdictions consisting only of investment entities or insurance investment entities, and entities subject to an eligible distribution tax system with an outstanding recapture account balance, subject to specified exceptions.

Entry and re-entry are also controlled. On first entry, the tested jurisdiction must not have had top-up tax calculated in the prior 24 months. For re-entry, the rules are stricter: the jurisdiction must have avoided top-up tax, either under a full calculation or specified Safe Harbour, for a fiscal year beginning within 24 months from the first day of the fiscal year in which the Simplified ETR Safe Harbour was not elected.

Finally, the Safe Harbour contains integrity principles. The Ministry identifies principles of matching, complete allocation, one expense or loss, and one tax. Failure to apply required integrity adjustments means the Safe Harbour is unavailable.

Substance-based Tax Incentive Safe Harbour