In the Revised National Budget, the government proposes to make it easier for you to raise capital to start a business. The object of the proposal is to make it more profitable to invest in new businesses as well as giving entrepreneurs easier access to capital and investors.

As a consequence, the government proposes a tax incentive scheme which implies that personal taxpayers who invest directly or indirectly in certain types of companies are entitled to deductions in ordinary income for up to NOK 500,000 in annual investments. Minimum investment amount is NOK 30,000. A company may receive up to NOK 1.5 million in annual investments through this scheme.

The terms for the deduction are:

  • The company being invested in must be a private limited company.
  • The company must have less than 25 employees (calculated from full-time equivalent (FTEs)).
  • The company must not be older than six years.
  • The company can neither have a running income nor a balance sheet total exceeding NOK 40 million.
  • The company must have an annual salary base of at least NOK 400,000 and must mainly carry out activities that are not passive asset management.
  • The investor must keep the shares in the company for at least three years.
  • The investor cannot be an employee or become an employee in the company during his ownership.

The scheme is proposed to apply from July 1st, 2017.

How to raise capital

The most important thing for an entrepreneur is to raise capital during the start-up phase. The traditional and easiest method is to launch the business idea to current investors. The government wishes to facilitate this by its proposed tax incentive scheme.

However, there are also other methods of raising capital:

  • Crowdfunding: This is a financing method in which several individuals join forces to fund a project. You contribute the amount you want. Social media has made it easier to start such crowdfunding. There are also websites that specialize in crowdfunding.
  • Entrepreneurial support from Innovasjon Norge: Innovasjon Norge has three funding services for newly established innovative companies. The criterion is that the company shall have a business idea that represents something new in the relevant market.
  • Venture capital: Capital is acquired by venture companies investing in companies that are in the establishment phase and have a high growth potential.
  • Business Angels: These are different affluent individuals who inject capital or expertise for start-up companies. Several such affluent individuals have joined forces in companies.

In addition, there are a number of public grant schemes for start-ups in various industries.