Quick answer: The India-Norway DTAA (signed 2 February 2011, in force since 20 December 2011) caps withholding tax at 10% on dividends, interest, royalties, and fees for technical services paid to Norwegian residents, down from India's 20% domestic rate. Interest paid to Norway's Government, Norges Bank, or Government Pension Fund is fully exempt (0%). A dedicated Limitation of Benefits (LOB) clause, absent from the 1986 treaty it replaced, guards against treaty shopping.
Key takeaways:
- Dividends, interest, royalties, FTS all capped at 10% vs 20% domestic rate
- Interest to Norway's Government, central bank, or pension fund is 0% exempt
- Treaty signed 2 Feb 2011, effective 20 Dec 2011, replacing 1986 convention
- Construction PE threshold is just 3 months, among India's shortest
- MLI's Principal Purpose Test applies from FY 2020-21 onward
Overview of the India-Norway DTAA
The Double Taxation Avoidance Agreement (DTAA) between India and the Kingdom of Norway is a comprehensive bilateral tax treaty designed to prevent double taxation of income and capital earned by residents of either country. The current agreement was signed at New Delhi on 2 February 2011 and entered into force on 20 December 2011, replacing the older Convention signed on 31 December 1986.
Norway is an important Nordic trade and investment partner for India, with bilateral relations spanning petroleum and energy, shipping, maritime services, information technology, and renewable energy. The DTAA ensures that businesses and individuals are not taxed twice on the same income, encouraging cross-border investment. The 2011 treaty represents a significant improvement over the 1986 convention, introducing substantially lower withholding tax rates of 10% across all major income categories (down from 15%/25% on dividends, 15% on interest, and a 20% ceiling on technical service fees under the old treaty), modern anti-avoidance provisions including a Limitation of Benefits (LOB) article, and updated exchange of information standards.
The treaty also includes specialised provisions for offshore activities related to petroleum exploration and extraction, reflecting Norway's position as a major oil-producing nation and the importance of the India-Norway energy corridor.
Treaty History & Current Status
The original India-Norway tax convention was signed on 31 December 1986 and entered into force on 9 September 1987. That treaty featured relatively high withholding rates of 15% or 25% on dividends and contained a tax sparing provision. As bilateral trade evolved and international tax standards modernised, both countries agreed to negotiate a completely new treaty.
The revised India-Norway DTAA was signed at New Delhi on 2 February 2011 and entered into force on 20 December 2011. The new treaty applies to income derived from fiscal years beginning on or after 1 April 2012 in India and calendar year 2012 onwards in Norway. Key improvements in the 2011 treaty include:
- Lower withholding rates: Dividends reduced to 10% from the previous 15%/25%, and interest to 10% from the previous 15%
- Limitation of Benefits (LOB): A dedicated article preventing treaty shopping, not present in the 1986 convention
- Enhanced exchange of information: Specifically providing for exchange of banking information and information without domestic interest
- Removal of tax sparing: The limited tax sparing provision in the old treaty's Method for Elimination of Double Taxation has been removed, aligning with India's updated tax policy
- Updated PE provisions: Including an insurance PE clause and expanded service PE definitions
Under the Multilateral Instrument (MLI), both India and Norway have ratified the BEPS Convention, signed on 7 June 2017. The MLI entered into force for India on 1 October 2019. For the India-Norway DTAA, the MLI modifications — including the Principal Purpose Test (PPT) for anti-abuse and updated permanent establishment provisions — became effective from FY 2020-21 onwards. The treaty already contained an LOB clause, and the MLI's PPT adds an additional layer of anti-abuse protection.
Key Treaty Articles
Business Profits (Article 7)
Business profits of a Norwegian enterprise are taxable only in Norway unless the enterprise carries on business in India through a permanent establishment (PE). If a PE exists, India can tax only the profits attributable to that PE. The article follows the OECD attribution approach, allowing deduction of expenses incurred for the purposes of the PE, including a reasonable allocation of executive and general administrative expenses.
Dividends (Article 10)
Dividends paid by an Indian company to a Norwegian resident may be taxed in India, but the tax shall not exceed 10% of the gross amount of dividends. This represents a significant improvement over the old treaty which allowed rates of 15% or 25%. The domestic Indian withholding tax rate on dividends to non-residents is 20%, so the treaty provides a 10 percentage point reduction. The uniform 10% rate applies regardless of the shareholding percentage, eliminating the complexity of the old treaty's tiered structure.
Interest (Article 11)
Interest arising in India and paid to a Norwegian resident is limited to 10% of the gross amount under the treaty, an improvement from the 15% rate under the old treaty. Interest paid to the Government of Norway, Norges Bank (Central Bank), the Government Pension Fund, or Norwegian export credit agencies is fully exempt from Indian tax under Article 11(3). This exemption is particularly significant given the size and global investment activities of Norway's Government Pension Fund (one of the world's largest sovereign wealth funds).
Royalties & Fees for Technical Services (Article 12)
Both royalties and fees for technical services (FTS) arising in India and paid to a Norwegian resident are capped at 10% of the gross amount. This covers payments for the use of copyrights, patents, trademarks, designs, secret formulas, processes, as well as managerial, technical, and consultancy services. The 2011 treaty combines royalties and FTS under a single article with a uniform rate, providing simplicity and certainty for cross-border technology and service transactions.
Capital Gains (Article 13)
Capital gains from the sale of immovable property are taxable in the country where the property is situated. Gains from sale of movable property forming part of a PE can be taxed in the country of the PE. Gains from sale of ships or aircraft used in international transport are taxable only in the country of residence. For shares, Article 13(4) allows gains from the alienation of shares in a company to be taxed in the country where that company is resident — so India may tax a Norwegian resident's gains from shares in an Indian company, with Norway providing relief for the Indian tax. Gains from any property not covered by the earlier paragraphs are taxable only in the alienator's country of residence under Article 13(5). India's domestic capital gains provisions, including GAAR and indirect transfer rules under Section 9(1)(i), may also apply.
Withholding Tax Rates Summary
The following table compares the DTAA treaty rates with India's domestic withholding tax rates for payments to Norwegian residents:
| Income Type | DTAA Rate | Domestic Rate | Savings |
|---|---|---|---|
| Dividends | 10% | 20% | 10% |
| Interest (General) | 10% | 20% | 10% |
| Interest (Government/Central Bank/Pension Fund) | 0% | 20% | 20% |
| Royalties | 10% | 20% | 10% |
| FTS | 10% | 20% | 10% |
For detailed rate breakdowns, see related DTAA pages for Sweden and Denmark for Nordic treaty comparisons. Note that surcharge and health & education cess are applicable over and above the DTAA rates when the income exceeds specified thresholds.
Permanent Establishment Rules
Article 5 of the India-Norway DTAA defines a permanent establishment as a fixed place of business through which the business of an enterprise is wholly or partly carried on. The definition includes:
- A place of management, branch, office, factory, workshop, or mine/quarry/oil well
- A building site or construction, assembly, or installation project lasting more than three months (notably shorter than the standard six or twelve month thresholds)
- The furnishing of services (including consultancy) by an enterprise through employees for a period or periods aggregating more than six months within any twelve-month period (for the same or a connected project)
The three-month construction PE threshold is one of the shortest in India's treaty network, reflecting the treaty's emphasis on capturing taxable activities in India from Norwegian construction and engineering firms, particularly those involved in offshore oil and gas projects. The treaty also includes a specific insurance PE clause and provisions for offshore activities related to petroleum exploration.
Dependent Agent PE
A person acting on behalf of a Norwegian enterprise in India is deemed a PE if that person has and habitually exercises authority to conclude contracts in the name of the enterprise. The MLI has expanded this to cover persons who habitually play the principal role in concluding contracts that are routinely concluded without material modification by the enterprise.
Offshore Activities
The India-Norway DTAA includes specific provisions for offshore activities related to the exploration or exploitation of the seabed and subsoil and their natural resources. These activities may create a PE if they continue for more than 30 days in a twelve-month period, a very low threshold reflecting the treaty's attention to the petroleum sector.
Tax Residency & Certificate Requirements
To claim treaty benefits, a Norwegian resident must obtain a Tax Residency Certificate (TRC) from Skatteetaten (Norwegian Tax Administration), certifying that the person is a tax resident of Norway for the relevant period. In addition, the Norwegian resident must submit Form 10F to the Indian payer, providing details such as nationality, tax identification number, and period of residential status.
The Indian payer deducting withholding tax under Section 195 of the Income Tax Act must ensure that the TRC and Form 10F are obtained before applying the reduced treaty rate. Without these documents, the payer must deduct tax at the full domestic rate. For remittances abroad, compliance with Form 15CA/15CB requirements is mandatory, with a Chartered Accountant certifying the applicable DTAA rate in Form 15CB.
Limitation of Benefits (LOB)
A distinguishing feature of the India-Norway DTAA is its dedicated Limitation of Benefits article, which was not present in the 1986 convention and is absent from many of India's other treaties. Under Article 29, treaty benefits are denied to a resident, or in respect of a transaction, if the main purpose or one of the main purposes of the creation or existence of that resident or of the transaction was to obtain benefits under the treaty that would not otherwise be available — a main-purpose test aimed squarely at treaty shopping.
The LOB clause works alongside the MLI's Principal Purpose Test (PPT), which was added from FY 2020-21. Together, these provisions create a robust anti-abuse framework that can deny treaty benefits to Norwegian entities that lack genuine economic substance or are established primarily to access India-Norway treaty benefits through intermediary structures.
How to Claim Treaty Benefits
Claiming DTAA benefits under the India-Norway treaty involves the following steps:
- Obtain TRC from Norway: The Norwegian resident must request a Tax Residency Certificate from Skatteetaten for the relevant financial year.
- File Form 10F: Submit Form 10F electronically on the Indian income tax portal, providing residency and treaty details.
- Self-Declaration: Provide a self-declaration confirming beneficial ownership and that the income is not connected to a PE in India, along with confirmation of LOB compliance.
- Submit to Indian Payer: Share TRC, Form 10F, and self-declaration with the Indian company making the payment so they can apply the 10% treaty rate instead of the 20% domestic rate.
- Section 90/90A Relief: If taxes have been withheld at a higher rate, the Norwegian resident can claim relief under Section 90 of the Indian Income Tax Act by filing an Indian tax return and claiming credit for taxes paid.
- Form 15CA/15CB: The Indian payer must file Form 15CA online and obtain a CA certificate in Form 15CB for remittances exceeding INR 5 lakh, certifying the DTAA rate applied.
For a detailed walkthrough, read our guide on how to claim DTAA benefits in India. Companies expanding into India from Norway should also review our Norway company registration guide and tax advisory services.
Frequently Asked Questions
What is the withholding tax rate on dividends under the India-Norway DTAA?
The India-Norway DTAA caps the withholding tax on dividends at 10% of the gross amount, compared to the domestic Indian rate of 20%. This rate applies uniformly to all dividend payments, regardless of shareholding percentage, as long as the beneficial owner is a resident of Norway with a valid Tax Residency Certificate. This is a significant improvement from the old treaty's 15%/25% rates.
How does the 2011 treaty differ from the old 1986 convention?
The 2011 treaty provides substantially lower withholding rates (10% vs the old treaty's 15%/25% on dividends and 15% on interest), introduces a Limitation of Benefits clause to prevent treaty shopping, removes the tax sparing provision, enhances exchange of information provisions (including banking information), and includes updated PE definitions with specific provisions for offshore petroleum activities.
When did the MLI become effective for the India-Norway DTAA?
The Multilateral Instrument (MLI) entered into force for India on 1 October 2019. For the India-Norway DTAA, MLI modifications — including the Principal Purpose Test — became effective from financial year 2020-21 onwards. The treaty already contained an LOB clause, and the MLI's PPT adds an additional anti-abuse layer.
What is the construction PE threshold under this treaty?
The India-Norway DTAA has one of the shortest construction PE thresholds in India's treaty network at just three months. A building site, construction, assembly, or installation project creates a PE if it continues for more than three months, compared to six months or twelve months in many other Indian DTAAs.
Is a Tax Residency Certificate mandatory to claim treaty benefits?
Yes, obtaining a Tax Residency Certificate from Skatteetaten (Norwegian Tax Administration) is mandatory under Indian law (Section 90(4) of the Income Tax Act). Without a valid TRC, the Indian payer must deduct tax at full domestic rates. Form 10F must also be submitted along with the TRC.
How does the Limitation of Benefits clause work?
The LOB clause (Article 29) is a main-purpose test: treaty benefits are denied if the main purpose, or one of the main purposes, of the creation or existence of a resident or of a transaction was to obtain benefits that would not otherwise be available. This prevents treaty shopping through shell entities established in Norway solely to access the India-Norway DTAA's favourable rates.
Are investments by Norway's Government Pension Fund exempt from Indian tax?
Interest paid to the Government Pension Fund of Norway is exempt from Indian tax under Article 11(3). For dividends, the standard 10% treaty rate applies. Capital gains treatment depends on the nature of the investment and the applicable provisions of Article 13, subject to India's domestic law on indirect transfers and GAAR.
This article is for general information only and is not legal, tax, or investment advice. Confirm current rules with the relevant authority or a qualified professional — or ask our team. See our full disclaimer.
Doing business between India and Norway? Our team handles the treaty filings.
Tax Advisory for Foreign Investors in IndiaNorway — Dividend Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General Applicable to all dividend payments to beneficial owner resident in Norway | 10% | 20% | Article 10(2) |
Norway — Interest Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General Applicable to interest paid to beneficial owner resident in Norway | 10% | 20% | Article 11(2) |
| Government/Central Bank/Pension Fund Interest paid to the Government, Norges Bank (Central Bank), Government Pension Fund, or export credit agencies of Norway is exempt | 0% | 20% | Article 11(3) |
Norway — Royalty Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General Royalties for use of or right to use any copyright, patent, trademark, design, model, plan, secret formula or process | 10% | 20% | Article 12(2) |
Norway — FTS Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General Fees for technical services including managerial, technical, or consultancy services | 10% | 20% | Article 12(2) |