Abstract of the article
Following the in depth-analysis, this article shows that the amendment of the Norwegian CFC rules in 2007 did not result in providing their full compatibility with the outcome of the CJEU and EFTA Surveillance Authority's case law. There is still a risk of conflict between the Norwegian CFC rules and the freedom of establishment, the freedom to provide services and the free movement of capital. The infringement of these freedoms may not be justified in all cases by the need for combating CFC tax avoidance schemes, because the Norwegian CFC rules do not apply only to CFCs being a wholly artificial or being a part of wholly artificial arrangement. Even though the Norwegian CFC rules are sufficiently flexible to be interpreted in line with the EU/EEA law, for example as provisions designed for combating tax avoidance with the use of wholly artificial arrangements, the practice of the Norwegian tax authorities shows that this is not always the case. Consequently, adequate legislative steps should be taken by the Norwegian legislator, e.g. the ones proposed in the article. For the time being, Norwegian taxpayers being subjects to Norwegian CFC rules can effectively challenge CFC taxation before tax authorities and courts due to the incompatibility of the said CFC rules with the EEA law. All in all, this contentious issue will in near future be decided by the Norwegian courts due to the fact that the EFTA Surveillance Authority in its judgment of 9 July 2014 in the case Fred Olsen and others v Staten v/ Skattedirektoratet stated that the Norwegian CFC rules must not be applied where it is proven, on the basis of objective factors which are ascertainable by third parties, that despite the existence of tax motives a CFC is actually established in the host EEA State and carries on genuine economic activities, which take effect in the EEA.
Read the article at Idunn.no.