Policies Towards Foreign Direct Investment
Norwegian lawmakers and businesses welcome foreign investment as a matter of policy and the government generally grants national treatment to foreign investors. The Government established “Invest in Norway,” an official investment promotion agency to help attract and assist foreign investors. It provides information, assesses regional opportunities, connects potential investors to relevant networks, and facilitates investment processes, including in the key offshore energy sector. While not a member of the EU, Norway is an EEA signatory and continues to liberalize its foreign investment legislation to conform more closely to EU standards. Current laws, rules, and practices follow below.
Limits on Foreign Control and Right to Private Ownership and Establishment
Norway’s investment policies vis-á-vis third countries, including the United States, will likely continue to be governed by reciprocity principles and by bilateral and international agreements. The EEA free trade agreement, which came into force for Norway in 1994, requires the country to apply principles of national treatment to EU members and the other EEA members – Iceland and Liechtenstein – in certain areas where foreign investment was prohibited or restricted in the past. Norway’s investment regime is generally based on the national treatment principles, but ownership restrictions exist on some natural resources and on some activities (fishing/ maritime/ road transport). State ownership in companies can be used as a means of ensuring national control and domicile for these firms.
Norway has traditionally barred foreign and domestic investors alike from investing in certain ‘public’ industries, including postal services, railways, and the retail sale of alcohol. In 2004, Norway slightly relaxed the restrictions, allowing foreign companies to bid on certain commercial postal services (e.g., air express services between countries) and railway cargo services (notably between Norway and Sweden). In 2016, the government initiated a reform of the railway sector leading to the first railway line opening for competition in 2018, with contracts being awarded to British and Swedish operators. The government has a mandate to allow foreign investment in hydropower (limited to 20 percent of equity), but rarely does so. However, the government has fully opened the electricity distribution system to foreign participation; foreign ownership interests are relatively limited, but increasing. Some foreign companies have been granted trading licenses in Norway and there is a growing number of foreign stakeholders that have invested in Norwegian wind and small-scale power production.
Ownership of Real Property
Foreign investors may generally own real property, though ownership of certain real assets is restricted. Companies must obtain a concession to acquire rights to own or use various kinds of natural resources, including forests, mines, tilled land, and waterfalls. Foreign companies need not seek concessions to rent real estate (e.g., commercial facilities or office space), provided the rental contract period does not exceed ten years. The two major laws governing concessions are the Act of December 14, 1917, and the Act of May 31, 1974. The updated 2019 National Security Act includes authority for the government to block foreign investments on national security grounds.
The Petroleum Act of November 1996 (superseding the 1985 Petroleum Act) sets forth the legal basis for Norwegian authorities’ awards of petroleum exploration rights, production blocks and follow-up activity. The Act covers governmental control over exploration, production, and transportation of petroleum.
Foreign oil companies report no discrimination in the award of petroleum exploration and development blocks in recent licensing rounds. The Norwegian government has implemented EU directives requiring equal treatment of EEA oil and gas companies. The Norwegian offshore concession system complies with EU directive 94/33/EU of May 30, 1994, which governs conditions for awards and hydrocarbon development. Norway’s concession process operates on a discretionary basis, with the Ministry of Petroleum and Energy awarding licenses based on which company or group of companies it views will be the best overall operator for a particular field, rather than purely competitive bids. Recent years have seen a shift in the composition of license holders and operators on the Norwegian Continental Shelf (NCS) as the shelf matures. Although several leading global energy companies, including from the United States, have left Norway as they rearrange their global asset portfolios, several U.S. companies remain active on the NCS.
The Norwegian government has dismantled former tight controls over the gas pipeline transit network that carries gas to the European market. All gas producers and operators on the NCS are free to negotiate gas sales contracts on an individual basis, with access to the gas export pipeline network guaranteed.
Norwegian authorities encourage the use of Norwegian goods and services in the offshore petroleum sector, but do not require it. The Norwegian share of the total supply of goods and services on the NCS has remained at approximately 50 percent over the last decade.
In September 2022, the Norwegian government introduced four legislative tax proposals that introduced a ground rent tax on onshore wind power generation, increased the tax on hydropower generation, and imposed a windfall tax on wind and hydropower in response to soaring electricity prices. U.S. and other investors have expressed concern over aspects of the ground rent tax proposal on onshore wind, which they see as drastic and having negative, retroactive effects in a nascent industry. As of March 31, 2023, the proposals have yet to be enacted by Parliament.
Following the 2022 passage in the United States of the Inflation Reduction Act, there is increasing pressure on the Norwegian government to create similar tax incentives for green investments in Norway. No new policies have been announced as of March 2023.
Norwegian legislation granting national treatment to foreign investors in the manufacturing sector dates from 1995. Foreign investors are not required to obtain government authorization before buying shares of Norwegian corporations.
Financial and Other Services
In 2004, the Norwegian government liberalized restrictions on acquisitions of equity in Norwegian financial institutions. Current regulations delegate responsibility for acquisitions to the Norwegian Financial Supervisory Authority to streamline the process. Financial Supervisory Authority permission is required for acquisitions of Norwegian financial institutions that exceed defined qualified ownership levels (20, 30 or 50 percent). The Authority assesses the acquisitions to ensure that prospective buyers are financially stable and that the acquisition does not unduly limit competition.
The Authority applies national treatment to foreign financial groups and institutions, but nationality restrictions still apply to banks. At least half the members of the board and half the members of the corporate assembly of a bank must be nationals and permanent residents of Norway or another EEA country. There is no ceiling on foreign equity in a Norwegian financial institution if the Authority has granted permission for the acquisition.
The Finance Ministry has abolished all restrictions on the establishment of branches by foreign financial institutions, including banks, mutual funds, and others. Under the liberalized regime, Norway grants branches of U.S. and other foreign financial institutions the same treatment as domestic institutions.
Media and Entertainment
In 2016 the Media Ownership Act has been abolished; ownership of the media is currently monitored by the Competition Authority. No individual party, domestic or foreign, may control more than 1/3 of the national newspaper, radio and/or television markets without a concession. National treatment is granted in line with Norway’s obligations under the EEA agreement. Broadcasting and audiovisual on-demand services are regulated by the Broadcasting Act which contains provisions on access to broadcasting (obligation to license), rules on advertising, sponsorship and product placement, retransmissions on cable networks, dissemination obligations, and general provisions on the organization of national broadcaster, NRK. The Broadcasting Act is largely based on the European Directive on Audiovisual Media Services 2010/13/EU (AMT Directive).
Over the past few years, national security concerns have increased with regard to high-risk foreign investments and transactions. A new Security Act entered into force on January 1, 2019, Chapter 10 of which, titled “Ownership Control,” contains rules on the screening and approval of investments and transactions related to Norwegian companies. Each relevant Norwegian ministry decides if the Act should apply wholly or partly to transactions that either: (i) involve classified information, (ii) control information, information systems, objects, or critical infrastructure for national functions, or (iii) are engaged in activities of crucial importance for fundamental national functions. The Norwegian rules on ownership control apply to both foreign and domestic acquirers without discrimination. There is an ongoing process to amend the Security Act to give the authorities a better overview of changes in ownership in Norwegian businesses and clarify the rules for stopping unwanted sales to foreign actors. The government used the Act in March 2021 to block the sale of a marine engine manufacturer to a Russian investor on national security grounds. The Norwegian government set up an interagency taskforce in 2022 to further improve rules and procedures to track investments into high-risk industries that are considered critical to Norway’s national security.
The government does not directly incentivize outward investment. However, it acknowledges that for Norwegian companies to be successful, they need to grow in markets and economies that are larger than Norway, so the trade and investment promotion agency, Innovation Norway, has offices in 32 foreign markets, including in Houston, New York, San Francisco, and Washington, D.C. Norway’s Government Pension Fund Global, the second largest sovereign wealth fund in the world, is administered by Norges Bank Investment Management (NBIM). It owns almost 1.5 percent shares of all the world’s listed companies with 43 percent of its investments in the United States.