Weigh up the pros and cons of a Norway entity set up versus using a global PEO partner when expanding your business internationally.
From employment contracts to work permits, there's a lot to consider when expanding your business abroad. However, the first thing to consider when setting up shop in a foreign country is a legal entity. An entity, otherwise known as a subsidiary, ensures that you can legally conduct business in a country but also communicates your long-term business interest in a country. Despite the positive business impact of a legal entity, the set up can be time-consuming, costly and logistically demanding. Instead, many companies choose to partner with a PEO, or an EOR, when expanding into Norway in order to save time, money and remove the risk of non-compliance.
Read on to see who needs to set up an entity, how to set up a legal subsidiary and how a PEO can help you expand into Norway without a legal entity.
Who needs to set up a Norwegian entity?
Any business looking to reap the benefits of Norway's stable economy must set up a legal entity.
If your company does not have a physical presence in Norway, then you do not need to set up a legal entity.
How do I set up a subsidiary in Norway?
The answer to this depends on multiple factors, primarily the type of company you wish to establish. Three of the most popular forms of corporate structure in Norway include:
- private limited company (Aksjeselskap or AS)
- public limited company (ASA)
- branch office of a foreign company
The most popular business type for foreign companies is a Norwegian Private Limited Company (Aksjeselskap or AS). While requirements may vary from business to business, the setup of a PLC (private limited company) usually requires:
- 50% of board members to be residents in Norway or in an EU/EEA country
- At least one shareholder with a board of directors
- At least NOK 30,000 capital deposited in a bank by partners
- Registration with the Register of Business Enterprises
- Filing for VAT registration
- Workers’ injury insurance for the employees
- A pension plan to be outlined for employees
Norwegian entity laws
To ensure compliant, fair operation of all businesses in Norway, private limited companies are regulated mainly by the Public Companies Act as well as the Stock Exchange Act, Securities Trading Act and the Accounting Act. The Norwegian Code of Practice for Corporate Governance (NCCG) also contains regulations on 'the division of roles between shareholders, the board of directors and executive management'. While the regulations they set out are not legally binding, they are expected to be followed in Norway.
Meanwhile, companies setting up any entity in Norway must also adhere to the Norwegian Working Environment Act (Arbeidsmiljøloven) or risk penalties against their business.
Compliance with Norway entity and employment laws is an ongoing process. While initial company registration can be challenging, businesses must still remain compliant and up to date with Norwegian laws as long as their business continues to operate in the country. This requires an in-depth knowledge of Norwegian entity laws and the Norwegian Working Environment Act as well regional best practices. Acquiring and maintaining this knowledge can cost you a considerable amount of time, money and resources, however, non-compliance causes an abundance of risk for your business including fines, penalties and even the possibility of being unable to operate in Norway.
The benefits of setting up an entity in Norway
Norway has a stable economy and thriving business network thanks to its status as an EEA member. As such, setting up a legal entity in Norway gives your company ample business opportunities and establishes your company's intentions for a long-term investment in the country.
More generally, Norway places foreign companies on a relatively equal footing with local businesses, which could be advantageous to growing businesses.
Why use a PEO partner instead of setting up a legal entity?
While it is plain to see that setting up a legal entity has its benefits, it still remains a costly, risky procedure. Not to mention that entity set up is just one of many tasks for business managers to navigate on their global expansion journey.
By outsourcing your Norway business expansion to a PEO or EOR, you can start reaping the benefits of Norway's growing, secure economy without the burden of a legal entity. This not only saves you much-needed time and resources but also provides increased flexibility for your business. Likewise, using a PEO lets you focus on other key aspects of business growth knowing that the legalities of tax, national insurance, employee onboarding, visas and employment contracts are handled compliantly.
At Leap29, our Norway PEO team have in-depth knowledge and first-hand experience of the Norwegian business market meaning that they can be fully relied upon to navigate your expansion in the Norway taking into account The Norwegian Working Environment Act and EEA member regulations.
If you would like to know more about how our trusted PEO services in Norway can support your international business expansion, contact our friendly team today.
What Our PEO Clients Say
"For the last few years, we have worked very closely with Simon and the team at Leap29 on a number of different projects in multiple countries across the globe. Leap29 have been a fantastic partner for us and are always willing to think with us to find the best solution. The communication with the team at Leap29 has always been excellent and Simon, in particular, is great to work with! They come highly recommended from us!"
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