The Double Taxation Agreement facilitates Norwegian investments in Singapore
“Effectively these agreements are intended to further international/ cross border trade and investment,” explains Are Zachariassen, Partner, Wikborg, Rein & Co. Advokatfirma DA, located in Oslo. “Both Norway and Singapore are small and open economies dependant on international trade and the entering into of the agreement has eased such trade and investment between the two countries.
The double tax agreement between Norway and Singapore is based on the OECD Model Tax Convention, and both Norway and Singapore have entered into approx. 90 such double tax agreements with different countries – most of them based on the Model Convention.
“From the perspective of Norwegian investors and businesses the key point is the use of the exemption method for dividends received by a Norwegian company from a Singapore company where it holds a qualifying shareholding (i.e at least 25 percent),” explains Are Zachariassen. “Such dividend is tax exempt in Norway regardless of the effective tax rate and business of the distributing Singapore company, which is very unusual when comparing with the other double tax agreements Norway has entered into.”
According to Are Zachariassen, the double tax agreement in principle benefits all cross border investments and investors, as well as individuals, expats etc. who work and/or invest in both Singapore and Norway. “But in a tax planning and optimisation context the tax exemption for dividends is of course especially attractive,” says Are Zachariassen.
The existence of a double tax agreements is a good thing, thinks Are Zachariassen. “I would say all cross border investors and individuals benefit from the existence of the agreement. And quite a number of companies benefit from the specific dividend tax exemption, although I do not know how many.”