All taxpayers are required to file annual tax returns, although for the vast majority of individuals who are subject to tax only on salaries and other reportable income and wealth, it is not strictly necessary to file a return. Tax returns for individuals are generated and made available through the government portal, Altinn. If the information included in the pre-populated return is correct, it is not necessary to actively confirm the return.
Businesses, including corporations, file returns. For significant or unusual transactions, it is also common to include an appendix to the return with a description of the tax treatment. Under the current Taxes Management Act (TMA), such an appendix may prevent tax penalties in cases where the tax authorities disagree with the position taken by the taxpayer, and provide for a five-year statute of limitation.
Until 2015, the statute of limitation was two years (10 years with regard to value added tax (VAT) until 2017). If the taxpayer had failed to provide correct and complete information to the tax authorities, the statute of limitation was 10 years. From 2015 (2017 with regard to VAT), the statute of limitation is five years, unless there are grounds to impose higher rate of tax penalties. In such cases, the statute of limitation is 10 years.
A tax dispute may start either through an audit or through a more simple exchange of letters with the tax authorities. Often, such exchanges may start with a request for additional information. The administrative process ahead of a dispute may in some cases be time consuming. In many cases, the tax office requests detailed and extensive information, which prolongs the process.
It is important to consider requests for information properly. Correspondence with advocates is generally privileged, but if consent has been given to share such correspondence with the tax authorities, it may be used as evidence. In cases where the tax authorities have seized and copied electronic archives, this may contain correspondence that is privileged. In HR-2017-467-A Saga Tankers of 1 March 2017, the Supreme Court held that the tax authorities are allowed to review all correspondence and determine as a starting point what is considered privileged. The Court held that sufficient safeguards were in place under Article 8 ECHR. The decision is widely criticised, but must nevertheless be taken into account in preparing for a tax audit.
In some cases, the tax authorities request information about group companies and transactions outside Norway. It may be appropriate, depending on the circumstances, to refer the tax authorities to the available agreements for exchange of information in such cases.
A tax audit is normally initiated by a notice from the tax authorities. This may in many cases detail the scope of the audit, although this would not limit what the tax authorities are allowed to investigate, should other issues surface during the audit. The tax authorities are also allowed to perform unannounced audits, but this is quite uncommon.
In most cases, there would be a start-up meeting with the tax authorities. To ensure documentation of information requests and information provided, this meeting should be limited to a presentation of the business and of facts requested by the tax authorities. In addition, the meeting is a good opportunity to discuss expectations and timing of the process.
During the audit, the tax authorities may either be on site of off site, and may request electronic access to the company's accounting systems and may request access to personnel for interviews. It is important to manage the process and ensure that information requests are documented and that the tax authorities clarify the transactions under investigation and their positions. It is possible (if uncommon) to challenge decisions made by the tax authorities during the process, either by appeal to the Directorate of Taxes or in court.
At the end of the audit, the tax authorities issue a draft audit report, mainly to allow the taxpayer to correct factual mistakes, including submission of additional evidence. Once a final report is issued, it would normally be accompanied by an updated notice of reassessment, allowing for additional submissions in fact and in law by the taxpayer.
The administrative process before a reassessment by the tax authorities also includes the right to review a draft version of the proposed reassessment. The draft is reasoned, stating the relevant facts and legal arguments the tax authorities are making for the reassessment. It is also possible to ask for a meeting with the tax authorities to clarify facts and legal arguments.
Once a decision has been made by the tax office to reassess, a claim for payment of the outstanding tax will be issued and must be paid within three weeks. This includes interest until the due date for payments. If the case is on appeal, it may be possible to agree a postponement of the payment, subject to security and late payment interest in case of a loss. Tax penalties, on the other hand, are not payable until the deadline for appeal is passed or the case is finally decided either by the Tax Appeal Board or in court.
A decision by the tax office may either be appealed to the Tax Appeal Board or be brought before the courts. Appeals must be made within six weeks of the time a decision has reached the taxpayer. A lawsuit must be filed within six months. The tax authorities may decide that a lawsuit cannot be filed before an appeal has been heard by the Tax Appeal Board.
In the choice between an administrative appeal to the Tax Appeal Board and a lawsuit, it is important to consider whether additional evidence is required. Taxpayers are to a certain degree prevented from presenting new evidence in court, to the extent that they could reasonably be expected to have been presented during the administrative process. If, on the other hand, the tax authorities have presented additional evidence, the taxpayer may be allowed to counter this new evidence. These principles are governed by case law, and can be complex to navigate.
A decision by the tax authorities may also be brought before the parliamentary ombudsman for review. The view of the ombudsman is not binding. An appeal to the ombudsman does normally provide for an extension of the deadline for a lawsuit.