Businesses assessed as partnerships (SDF)
A business assessed as a partnership (Norwegian abbreviation "SDF") is a company structure with two or more owners that are called partners. The partners share the obligations and risks.
The SDF does not pay tax itself as only the partners are taxed for their share of the business’ income and wealth.
Does this apply to me?
This applies to businesses assessed as partnerships and to partners.
The following are businesses assessed as partnerships (SDF):
In a general partnership (ANS), each of the partners has an unlimited personal liability for the business’ collective obligations. Unlimited liability means that the partners have a joint and several liability for the business’ obligations. In practice, if a creditor cannot cover their claim from the business, they may recover their money from any of the partners in the business. This means that the partners in the business have a joint and several liability for the business’ obligations.
In a general partnership with shared liability (DA), each partner’s personal liability is limited to their share of the partnership. This means that if someone has a 50 percent owner share, their liability will be limited to 50 percent of the partnership’s obligations. This differs from ANS where the partners have a joint and several liability.
A limited partnership has at least one partner with unlimited liability for the partnership’s obligations and at least one partner with limited liability for the obligations. The partner with unlimited liability could be a private limited company.
A shipping partnership carries out shipping activities and the partners have unlimited liability for the partnership’s obligations.
A foreign company that's the equivalent of a Norwegian business assessed as a partnership, which carries out activity that is taxable in Norway.
What the company needs to do
Company tax return with business information
- The company tax return must include information about:
- the partners' ownership interests in the company
- the division of income and wealth between the partners
- dividend (distribution) to the partners
- the buying or selling of ownership interests
- Business information
The company tax return must be submitted via an accounting system.
Value added tax
If the company is registered in the Value Added Tax Register, it must also submit a VAT return.
Specific information for partnerships that
An internal partnership is a company, but it does not act as a company publicly. Such companies can be established in the form of an ANS, DA, or a limited partnership. Since internal partnerships do not act publicly, they must not be registered in the Central Coordinating Register for Legal Entities and do not have their own organisation number.
Must submit a company tax return and partner returns
Internal partnerships are obligated to submit a company tax return and partner returns. The partnerships must therefore be registered with the Tax Administration and will be assigned an internal identification number (ID number). This number can also be used in connection with online submissions via Altinn.
How to get an ID number
To register the partnership and assign an ID number, the Tax Administration will require the following information:
- The name of the company
- The date of establishment
- Industry
- The purpose of the company
- The postal address of the company
- Office municipality
- Principal – name and national identity number/organisation number
- Manager – name and national identity number/organisation number
- Auditor – name and national identity number/organisation number
- General manager – name and national identity number
The information can be sent to the Tax Administration via Altinn, or directly via email.
Changes to Altinn roles for internal partnerships must also be reported to the Tax Administration. These roles will not be updated on the basis of a company tax return.
A company can change its company structure due to inheritance or transfers. This may affect the company's tax.
Example
You and your siblings inherit a business that was run as a sole proprietorship. If you choose to continue running the business, it will be considered an SDF.
Under certain conditions, an SDF may be converted tax-free from an SDF to a private limited company with fiscal continuity.
Conversion can be a challenging process. The applicable rules are complex, and a number of conditions must be met. You should consider using a professional adviser. If the rules are not followed, it may lead to significant tax related consequences.
What the partners need to do
A partner could, for example, be a person or a company.
Take care of tax deduction cards and advance tax
Remember that the partners must check their tax deduction card.
As a partner, you must ensure you pay advance tax. Your advance tax is calculated on the basis of remuneration for work, business income and other taxable payments.
Submit the tax return
As partner in the company, you must submit the ordinary tax return by the set deadline. Income and wealth are entered under the topic “Wealth and income in a business assessed as a partnership”.
Amongst other things, the partners must declare:
- their share of the wealth in the company
- their share of the company’s profits or deficits
- remuneration for work (personal income)
- distributions
- gains and losses upon the divestment (sale) of ownership interests
If the company has submitted the company tax return before you submit your personal tax return, the information about your share of the income and wealth will be listed as suggestions.
Check the partner’s own contact information
Notifications and messages to partners in an SDF are sent to those who are registered as partners. Check that the information in Altinn is correct.
Specific information to partners who
If you receive distributions from the company, this will generally be considered taxable income. As a general rule, a distribution is anything you are given free of charge from the company, both in the form of cash and assets.
You will receive a deduction in the distribution for tax on your share of the company’s profits. In addition, you will receive a so-called risk-free return allowance.
Only personal partners are taxed for distributions from the company. Companies that are partners are taxed according to the exemption method.
The transfer of assets is not considered distributions
If you, in connection with the establishment of a company or later have transferred assets in the form of cash or items to the company, the repayment of such assets will not be considered a taxable distribution. This will be repayment of previous paid-up capital that is not taxable.
- information about the special allowance for agriculture
- information about the special allowance for reindeer husbandry
If you're a partner in a foreign business assessed as a partnership, you must submit the tax return for businesses. Norwegian partners in foreign businesses assessed as a partnership are obligated to jointly make submissions of the company tax return on behalf of the businesses.
More about foreign businesses assessed as partnerships (USDF).
If you're a partner in a company that is covered by the NOKUS rules, you must submit the tax return for businesses. Norwegian taxpayers that by themselves or with others are taxed according to the rules for owners of Norwegian-controlled companies domiciled in low-tax jurisdictions (NOKUS), are jointly obligated to submit the company tax return.
Deadlines
The company
- The company tax return with business information:
- the deadline for submitting is 31 May.
Partners
- The tax return:
- partners in companies are considered self-employed, and their deadline is 31 May.
- As a self-employed person, you can apply for an extended deadlineto submit the tax return. You must do so by 31 May. If the company has been granted an extended deadline, this extension will also apply to the partners without them having to apply.
- If you're applying for an extension as a self-employed person, the new deadline is 30 June. No further extension is granted.
The company
- If the company tax return with the business information is not submitted by the deadline, the company may be issued an enforcement fine.
Partners
- If you do not submit the tax return by the deadline, you may be issued an enforcement fine.
It's important that the partners submit information that correspond with the information submitted by the company.
It will not be sufficient that the company submits information about, for example, distributions and work remuneration in the company tax return.
The partners may be charged with additional tax if the company or partners do not submit the correct information.
Important information
This year, some groups of businesses have received an automatically extended deadline. This only applies to the tax return for the 2023 income year that you submit in 2024.
Find out more and see which groups this applies to (in Norwegian only)
Supporting documents
You do not have to send us any supporting documentation or include attachments in the tax return, but you must retain your accounts and any vouchers along with other supporting documents. You must be able to provide such supporting documents if we ask you to do so.