NUF vs. AS — Choose the right business structure in Norway

Choosing the right company form is one of the first and perhaps most important choices foreign businesses must make when establishing themselves in Norway. The choice is often between NUF (Norwegian Registered Foreign Enterprise) and AS (limited liability company). Both alternatives can provide good opportunities, but they also have clear differences that can affect everything from economic risk to reputation. In this article, you will get a legally oriented review of the differences you should be aware of. We conclude with some practical advice that can make the choice easier for you.

What is a NUF?

A NUF (Norwegian Registered Foreign Enterprise) is legally a Norwegian branch of a foreign company. This means that the Norwegian unit is not a separate legal entity, but rather an extension of your existing business abroad. For foreign business owners, this structure can be advantageous if you already have an established enterprise in your home country and want to expand into the Norwegian market without creating an entirely new legal entity.

• No Norwegian capital requirement: A NUF follows the capital rules of its home country.
• Tax liability in Norway: The branch is only taxed for income generated from activities in Norway that constitute a permanent establishment under Norwegian tax law and applicable tax treaties.
• Parent company liability: The foreign parent company bears ultimate responsibility for any financial obligations or debts incurred by the Norwegian branch, which creates unlimited liability for the parent company.

An important consideration is that NUFs sometimes face credibility challenges in the Norwegian market. Some Norwegian businesses and financial institutions may perceive NUFs as less established or committed to the local market. Banks may require additional documentation or guarantees before providing financing. This perception typically depends on whether the parent company can demonstrate substantial operations, financial stability, and a long-term commitment to the Norwegian market.

Also read: How to establish a Norwegian branch of a foreign company (NUF)

What is an AS?

An AS (Aksjeselskap) is a fully independent Norwegian limited liability company with its own organization number registered in the Norwegian Register of Business Enterprises. As a separate legal entity, an AS provides shareholders with limited liability protection, meaning their personal assets are shielded from company creditors. The company operates as a distinct legal entity when dealing with creditors, customers, and Norwegian authorities.

• Capital requirement: The minimum requirement is NOK 30 000 in share capital, which must be fully paid before registration can be completed.
• Board requirements: Norwegian law dictates specific rules for board composition, including residency requirements, and in some cases gender representation.
• Full tax liability in Norway: A Norwegian AS is, in principle, subject to taxation on its worldwide income. However, tax treaties may provide relief from double taxation if operations span multiple countries.
• Compliance and reporting: An AS must adhere to formal requirements including regular board meetings, annual general meetings, preparation of annual accounts, potential audit requirements, and mandatory submission of annual accounts to the Brønnøysund Register Centre.

For many businesses, AS appears to be a “safer” choice because of the clearly defined limitation of liability and because many customers in Norway are accustomed to dealing with limited companies. This often provides a solid reputation and can make it easier to access financing. But remember that it also entails more formal requirements, and ongoing operations must comply with Norwegian company law rules.

Also read: Setting up a private limited company in Norway

NUF or AS: What suits your planned operations?

Although both NUF and AS require registration in Norway, there are different factors that come into play for the choice.

1. Capital and risk
   1. If you need a low threshold and minimal contributed capital, a NUF may be tempting.
   2. If you want a wholly Norwegian company with clear limitation of liability, an AS is a better choice.
2. Tax planning
   1. NUF: May avoid full Norwegian tax liability if the activity in Norway does not constitute a permanent establishment under Norwegian tax law and applicable tax treaties. 
   2. AS: Taxed on its global income, but also has access to Norwegian deduction schemes, and any dividends to EU/EEA owners may be exempt from withholding tax under certain conditions.
3. Market reputation
   1. NUF: Less common in certain industries.
   2. AS: Widely accepted and often associated with stability and professionalism.
4. Administrative burdens
   1. NUF: Has fewer internal requirements for meetings and company structure but must still comply with Norwegian accounting and tax rules for the branch.
   2. AS: More formal requirements for general meetings, board meetings, and reporting.
      
      

Legal requirements for operating in Norway

Whether you choose NUF or AS, certain formal registrations must be completed to operate legally:

• Registration in the Entity Register and the Business Register: Both company forms require this.
• VAT registration: If annual turnover of taxable goods and services exceeds NOK 50 000, registration in the Norwegian VAT Register is mandatory. Note that when exclusively providing personnel services to Norwegian clients, these may be considered as services delivered to Norway rather than in Norway, which affects VAT registration requirements differently.
  
  

Also read: Do you need to register a company in Norway? Here's how.

Key advantages and disadvantages

Below you will find an overview list that summarizes the main advantages and disadvantages of NUF and AS. For businesses considering a market entry strategy in Norway, it's important to evaluate these advantages and disadvantages in the context of your specific business plan, industry, and long-term objectives in the Norwegian market.

How do you choose the right business structure in Norway?

The following points can be central to finding out which company form is best suited:

1. Scope of the business: Are you going to invest heavily and have multiple employees in Norway, or is it just an extension of your existing business?
2. Planned time period: Is this a long-term establishment, or is it a limited and single project?
3. Investor and customer perspective: How is your relationship with banks, investors, and potential business partners affected?

If you have a long-term perspective, an AS can often create predictability and a stronger foothold in the Norwegian market. If you are most concerned with an effective branch without formal capital outlays, a NUF is a good alternative, especially if you already have a solid operational structure abroad.

Summary and the way forward

The choice between NUF and AS is essentially about whether you want a full Norwegian company structure, or if you want to maintain control from abroad with a branch in Norway. A NUF has a lower threshold for establishment and is flexible but may be perceived as less recognized. An AS can provide a stronger local reputation and clear limitation of liability, but with more formal requirements and higher costs.

The optimal choice between NUF and AS depends on your specific business context, risk appetite, and long-term strategy for the Norwegian market. We recommend conducting a thorough assessment that considers capital requirements, liability concerns, tax implications, and your growth strategy. Regardless of which structure you select, compliance with Norwegian regulations for accounting, tax reporting, and business registration is mandatory.

Our legal team specializes in business establishment for foreign entities and can provide tailored guidance for your specific company and operational plans in Norway. Contact us for a personalized consultation to ensure your Norwegian business structure aligns with your strategic objectives.

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